Big Four accountant KPMG will stop doing non-audit work for FTSE 350 companies that have hired the firm to check their accounts after it became implicated in a raft of accounting scandals.
Bill Michael, KPMG chairman, has outlined a plan in a memo to partners to phase out all non-audit services deemed non-essential for audit clients to “remove even the perception of a possible conflict [of interest]”, according to a person familiar with the matter. This includes work such as advising on IT projects.
The move comes amid growing calls for the Big Four accounting firms that dominate the UK’s £12.6bn accounting market to be broken up. The UK’s accounting watchdog, the Financial Reporting Council, earlier this year singled out KPMG for criticism by saying the quality of its audit work had deteriorated to an “unacceptable level”.
KPMG’s audit team has been involved in major scandals, including its work for the controversial Gupta family in South Africa, its audit of collapsed government outsourcer Carillion and work for insurance technology group Quindell, for which it was fined for misconduct.
The firm has not been found by any regulatory body to have failed in its audit work…