The Big Four audit firm KPMG has warned some of the UK’s largest companies that they have faced a significant increase in audit fees in a matter of weeks before thousands of employees have significantly raised their salaries.
This was reported by Sky News KPMG informed the listed audit clients that next year the cost of verifying their accounts will increase to 20%.
The move threatens to add millions of pounds to the annual bills facing companies such as Barclays, Legal & General, Reckitt Benckiser and Standard Chartered.
In a letter to clients sent to Catherine Burnett, head of audit at KPMG UK, the firm said that the pressure on costs caused by the revised accounting standards means that auditing is becoming more of a resource.
“Audit quality remains our top priority, and we strive for consistently high-quality audits,” she wrote in a letter to a client who saw Sky News.
“We have made significant progress, backed by our record level of investment, but we still need to make it.
“We are committed to continuous improvement and investment.
“As you may know, we are facing a number of additional cost growth factors, in particular the requirements of the revised ISA (UK) 315, which we estimate will add 5 to 20% to baseline audit costs as well as significant inflation pressure on staffing and hiring costs ”.
KPMG’s hand in the UK has been hit by Fr. a number of multimillion-dollar audit finesthe most significant of which happened this month when he was fined almost £ 15 million for working on Carillion, a construction giant that collapsed in 2018.
The firm, now run by John Holt, has apologized for the shortcomings in its work, but has faced a legal claim of £ 1.3bn from the official recipient.
Last year, the industry regulator, the Financial Reporting Council, said KPMG’s audit work in the banking sector was insufficient.
The firm has revised its leadership over the past 12 years when former UK President Bill Michael resigned following comments made during a video call with colleagues.
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Earlier this month, KPMG raised staff salaries by at least £ 2,000 amid intensified struggles with recruitment in the professional services sector.
The auditing profession has been awaiting a profound overhaul of regulation since the closure of Carillion and BHS, a chain of department stores formerly owned by Sir Philip Green.
However, although the Queen’s recent speech included a provision on a bill covering audit reform, the most radical changes are likely to take a few more years – if they materialize at all.
The firm declined to comment on a promising increase in audit fees.