The “oligarchy” controls the standard-setters, ensuring rules of the game suit it. The long reach of the bean counters also extends deep into the heart of government.
KPMG, one of the world’s “Big Four” accounting firms, has shown an “unacceptable deterioration” in auditing British firms and will be subject to closer supervision, the UK’s top accounting watchdog warned on Monday. “Fifty percent of KPMG’s FTSE 350 audits required more than just limited improvements, compared to 35% in the previous year,” the Financial Reporting Council (FRC) said.
In other words, KPMG’s UK auditing division got about half its work in the last year badly wrong and is about to have its auditing work more closely audited. The increased scrutiny of KPMG will involve the FRC inspecting 25% more audits done by the firm in the 2018-19 financial year, the first time the FRC has taken such action.
KPMG is under the spotlight in large part due to its abject failure to properly audit the UK outsourcing giant Carillion, which collapsed at the beginning of this year. Between 2012 and 2016, Carillion ran up debts and sold assets just to continue paying out dividends to shareholders. Yet in Carillion’s last ever annual report, KPMG approved Carillion’s viability statement, certifying it as strong enough to survive for “at least three more years.” Within less than three months, Carillion was bankrupt…
