The number of audit firms to resign from jobs jumped last year as the sector comes under increasing regulatory pressure.
Resignations have risen 21 per cent to 229 in 2018/19, up from 190 the previous year, according to the latest research by Thomson Reuters.
The spike in resignations comes as audit companies are increasingly in the spotlight following a string of high profile corporate collapses and accounting errors.
Auditors could be reviewing their connections to “high risk” clients, experts said, as the Financial Reporting Council (FRC) hikes the level of fines it can impose.
Sports Direct’s auditor Grant Thornton resigned last year following the last minute discovery of a €674mBelgian tax bill. The retailer has now resolved most of the claim.
Grant Thornton also came under fire in 2019 when its client Patisserie Valerie revealed a multi-million pound hole in its finances.
KPMG could face legal action over its audit of Goals Soccer Centres, which entered administration last year following the discovery of a “substantial misdeclaration of VAT”.
The audit firm was also criticised for giving construction and outsourcing giant Carillion a clean bill of health before it collapsed in 2018.
There have been calls for the Big Four accountancy firms – KPMG, PwC, Deloitte and EY – to spin-off their audit businesses to reduce potential conflicts of interest.
Brian Peccarelli, chief operating officer for customer segments at Thomson Reuters, said: “Audit firms have responded to regulatory pressure and are now pouring far more time and resources into audits. Doing this has an obvious impact on costs.
“They are also investing heavily in AI, big data and other technology in order to improve audit quality and keep costs under control.
“However, there is an increasing acceptance amongst regulators and the profession that audits must be properly charged for.
“With the FRC increasing the level of fines it imposes on audit firms it is also understandable that audit firms will want to review their relationships with ‘high risk’ clients.”