I don’t always agree with the outspoken Alex Brummer in the Daily Mail but on the scandal of the big four accountancy firms auditing companies while at the same time recommending remunerations for the directors – he is bang on.
In his ‘litany of failures and scandals it’s time for auditors to face a reckoning’ piece he rightly points the finger at not just PwC, Deloitte, EY and KPMG but also at the dithering Lord Callanan. The unelected member of the House of Lords Martin John Callanan, Baron Callanan is the Parliamentary Under Secretary of State at the Department for Business, Energy and Industrial Strategy and has the power to implement one of the reports on the big four accountants.
Failures over Conviviality
The reason why he needs to act is because there have been a series of complete failures by the big four accountants in auditing the accounts of firms such as Conviviality, Patisserie Valerie and Thomas Cook exposing the conflict between auditing and work such as processing bonus payments to failed directors.
Installed on St Valentine’s day this year as the man with the powers to reform the activities of PwC, Deloitte, EY and KPMG Callanan has so far shown no appetite to take on the powerful vested interests who have by their actions thrown thousands out of work and brought destruction to many SMEs. Six years ago John Kingman’s report said the Financial Reporting Council should be replaced by a tougher body with stronger powers to take PwC, Deloitte, EY and KPMG to task. He proposed the obviously sensible plan to separate the audit and consulting arms at the big four auditors. And more recently Donald Brydon’s review recommended the same thing. Essentially the referee could no longer be the footballer as well, waving away penalty claims or requests for a free kick.
BooHoo and Wisecard
But since then despite the ongoing issues over BooHoo, Wirecard and umpteen other questionable actions of accountants and their clients nothing has happened.
Brummer noted: “It is hard to bring discipline to boardroom pay when the same firm that does the audit is also charged with setting remuneration. In a statement of the obvious, the minister notes that the three audit reviews are ‘interlinked’ reforms being developed and that not all require legislation. Amid excuses about pressure of parliamentary business, no timetable is given. The flaccid approach smacks of heavy lobbying by powerful accounting firms.”
Carillion cost billions
If only the dithering Lord Callanan listened to the voices of small and medium businesses, the chambers of commerce and the self-employed lobbyists instead of the big four we might have a reform of the system that’s cost the nation billions of pounds. Many firms have gone to the wall over the likes of Carillion collapsing, the public have lost out big time when companies like Thomas Cook go under and the tax payer has to pick up the tab for redundancies. It really is time for action.
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk