UK watchdog says audits by accountants BDO and Mazars ‘unacceptable’

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LONDON, July 20 (Reuters) – Britain’s accounting watchdog said on Wednesday that results from its annual review of audit quality at BDO and Mazars were concerning and unacceptable, while the Big Four accountants have shown improvements.

The Financial Reporting Council undertook spot checks on audits from EY, PwC, Deloitte, KPMG – known as the Big Four – and BDO, Mazars and Grant Thornton.

Overall, 75% of audits inspected were good or required limited improvement, up on 71% last year and 67% in 2020, although the individual results were uneven, the FRC said.

Four of the eight audits reviewed at Mazars and five of the 12 reviewed at BDO needed more than limited improvements.

“BDO and Mazars’ results remain concerning and specific supervisory plan have been developed to address this,” it said in a statement.

“The inspection results at Mazars and BDO remain unacceptable.”

BDO said it has made significant investments in resources in its audit practice over the last year, including the addition of 350 people, steps which take time to embed.

Mazars said it was very disappointed with the findings and it was committed to addressing the issues identified, and will continue to invest in and focus on applying the highest quality standards.

None of the Big Four or Grant Thornton had audits that required significant improvements, and KPMG, which had fared badly last year, has improved significantly though the FRC said it would continue to monitor KPMG’s banking audits.

Improvements at the Big Four and a decline in quality at BDO and Mazars were partly explained by the former ditching “risky” clients which were being picked up by the latter, said Sarah Rapson, the FRC’s executive director for supervision.

(Reporting by Huw Jones; Editing by Louise Heavens and Stephen Coates)

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