KPMG boss intervenes in dispute with FRC over poor auditing standards
The global head of KPMG has written to the UK’s Financial Reporting Council (FRC) over the its threats to publish further criticism of the auditor’s repeated failings, the Financial Times first reported.
Bill Thomas, KPMG’s global chair and chief executive, entered the increasingly public dispute between the big four auditor and the FRC, after executives grew concerned that the regulator would publish a letter castigating the firm for poor quality banking audits.
The accounting giant’s communications with the UK regulator are normally managed by KPMG UK executives, drawing attention to the decision by the global head of KPMG to step in.
Relations between the FRC and KPMG have been strained as the latter faces regulatory scandals. The firm is currently under investigation over its audits of UK companies including Carillion, for which it faces a legal claim of over £250m.
In July KPMG was also singled out by the FRC for failing to meet standards in its banking audits for the third year in a row, as part of a review that found that a third of large company audits by the biggest UK firms failed to meet standards.
The FRC’s threat to publish a letter slamming KMPG further came as a result of frustration with the big four firm for not taking appropriate actions to improve its banking audits, sources told the Financial Times.
Following the intervention by Thomas and KPMG lawyers though the accounting regulator chose not to follow through with its threat.
KMPG declined to comment on its interactions with the FRC, citing confidentiality.
The FRC has also been contacted for comment.