Home' A Plus Magazine : September 2013 Contents 8 September 2013
Middle-tier accounting firms in the United Kingdom have lambasted the
Financial Reporting Council for recommending that mandatory audit tenders
should be issued every 20 years, rather than the five years proposed by the
The Kreston International group, an association of independent accounting
firms, said the FRC’s proposals would simply reinforce the dominance of the Big
Four among audit engagements for FTSE-350 companies.
Kreston also called for shared audits, where a smaller firm takes
responsibility for auditing a company’s smaller subsidiaries, while reporting to
the main auditor.
Fiona Hotston Moore, a senior tax and audit partner at Reeves, another middle-
sized firm, said the FRC’s proposals would not open up the British market.
“It will not address the cosy relationship bet ween the Big Four audit firms
and FTSE companies, which the Competition Commission warned might
impact auditor independence,” Hotston Moore told The Daily Telegraph.
The FRC said it was concerned about the expenses involved in the shorter
audit tenders. “ We are concerned that tendering on a five-year basis will involve
additional costs and risks to companies and firms,” Stephen Haddrill, CEO of
the council, said in a statement.
Steve Clark, managing partner at James Cowper, another medium-sized
firm, said that while he opposed mandatory rotation, the FRC’s proposals
merely “showed the power of the Big Four.”
Clark said he backed the use of shared audits. “People need to recognize that
there are a lot of very good firms outside the Big Four, which are very capable of
doing audits,” he told the Telegraph.
Deloitte, EY, KPMG and PricewaterhouseCoopers audit 99 of the FTSE-100
companies. The single exception is Randgold Resources, a mining company,
which engages BDO.
Baker Tilly buys RSM
Baker Tilly in the United Kingdom has bought
its indebted rival RSM Tenon from its admin-
istrators. RSM shareholders will not receive
anything from the sale, the administrators said.
Employees and clients are not expected to be
materially affected, an RSM statement said.
NZ institute to vote
on Australia merger
New Zealand Institute of Chartered Accountants
members will vote next month on whether
to merge with the Institute of Chartered Ac-
countants Australia. NZICA chairman Graham
Crombie told The National Business Review, an
Auckland financial newspaper, that feedback
indicated widespread support to form a com-
bined institute. The results will be announced
PCAOB says brokerage
The Public Company Accounting Oversight
Board in the United States has said it has discov-
ered a “troubling” level of deficiencies in the way
that registered securities brokers and dealers are
audited. An inspection of 60 audits by 43 audi-
tors revealed deficiencies in 95 percent of the
individual audits and at all the firms.
South African councils
awash in red ink: report
Only nine of South Africa’s 278 municipalities
completed successful audits in the 2011-12 fi-
nancial year, according to the country’s auditor-
general. Terence Nombembe said financial
management in municipalities showed a “sharp
deterioration.” Wasteful expenditure totalled
568 million rand (US$55 million) more than dou-
ble the previous year’s total.
Switzerland paves way for
banks to settle tax dispute
Switzerland’s government has approved a draft
plan with the United States for Swiss banks to
settle a tax evasion dispute. The deal, announced
last month, comes after years of negotiations over
U.S . probes of at least a dozen banks, which alleg-
edly helped Americans evade taxes.
French watchdog fines SocGen
over accounting shortcomings
The French financial markets regulator said it was fining Société Générale
€500,000 in connection with substandard auditing of its asset management
The Autorité des Marchés Financiers criticized Société Générale for short-
comings in its auditing procedures, saying the bank had not allocated adequate
human and computer resources.
The AMF said the penalty was in addition to the €280,000 fine imposed on
Société Générale for improperly selling investment fund contracts.
The bank said it had taken note of the decision and reser ved the right to ap-
peal. It added that it has not received any complaints from asset management
clients about its ser v ices.
Mid-tier U.K . firms criticize FRC
over longer audit tender terms
Big Four dominance unlikely to be challenged
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