Big four accountants warned by FRC to improve on audits

THE FOUR largest accountancy firms need to improve the quality of audit services, a body within the Financial Reporting Council (FRC) has warned.

A report into the auditing practices of the “big four” accountancy firms, including Deloitte, Ernst & Young, PricewaterhouseCoopers (PwC) and KPMG, found that in three cases KPMG had signed off on audits before all necessary work had been completed.

The report, which was published by the Professional Oversight Board, is related to audits conducted by the top four accountants for the years ending December 2008 and March 2009.

The report said the four largest accounting firms do not always apply “their procedures consistently on all aspects of the audits”.

It also stressed that firms needed to embrace “more fully the principles underlying the ethical standards and accept that non-audit services should not be provided to audit clients where safeguards do not exist”.

The report found that Deloitte may have twice committed breaches in this area, in one case where it provided two staff to an audit client to advise management for a six month period. The report also said Ernst & Young should ensure employees’ promotion prospects were not linked to their ability to sell non-audit services to audit clients.