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BreakingDeloitte to stop consultancy work for audit clients

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Like KPMG on Thursday, Deloitte says it will no longer offering consulting services to audit clients.

Its submission to the Competition and Markets Authority has been released this morning and states:

"We recognise that in the UK there are still concerns around auditor independence. These concerns are not generally held elsewhere around the world, but given the UK environment we support a ban on all non-audit work by a firm to those FTSE 350 companies and large public interest entity private companies which it audits."

KPMG sets the trend

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KPMG has said it will no longer do consultancy work for the UK's biggest companies if it also audits them.

Stephanie Butcher at Invesco Perpetual says the move has a certain inevitability given the regulatory concern about conflicts of interest for the "big four" accounting firms.

Given the that EU has been considering regulation to ban such conflicts, she tells Today the other three - Deloitte, E&Y and PwC - are likely to follow KPMG's lead.

Earlier this year the Financial Reporting Council said the auditing work of the "big four" firms had deteriorated, with KPMG's work in particular showing an "unacceptable deterioration".

KPMG to cease non-audit work - report

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Sky News is reporting that KPMG will no longer provide non-audit work for FTSE 350 firms that it audits.

Sky News says that the accountancy firm will phase out all but essential non-audit services for FTSE clients.

KPMG was auditor to Carillion, the outsourcing firm that collapsed in June. It also provided non-audit services to the company.

The accountancy and audit industry is under scrutiny at the moment following the high profile collapse of companies such as BHS which was audited by PwC.

Productivity keeps lid on UK growth

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KPMG reckons that the UK economy will grow by 1.4% next year if the country achieves a frictionless exit from the European Union.

If it is a no deal, however, it will expand by 0.6%.

The accountancy firm's chief economist Yael Selfin tells BBC Radio 4's Today programme: "What's driving these numbers is the weak productivity performance that we've seen in the UK and we're expecting to see in the next few years and that's really the ceiling, if you like, on the growth prospects."

If the UK has a no-deal Brexit, Ms Selfin says: "We could still have a technical recession which is a couple of quarters of negative growth...but what you're also likely to have is businesses preparing for a new reality therefore investment would inevitably pick up a little bit once we know where we're heading."