KPMG warns businesses of audit price hikes
Amid a wave of scandals punishing the Big Four firm, KPMG has warned its big ticket clients of potential audit price hikes in the near future.
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Yes; well how else do you expect them to pay all these multi-million pound fines for audit [***]-ups and yet maintain their obscene oligopoly profits?
And if I were a client being subject to those price increases, I would be standing firm with my middle finger raised in their direction.
There's such a thing as knowing how and when to read the room. Then there's..... this.
“Audit quality remains our top priority, and we are committed to delivering consistently high-quality audits,”
I assume this is a new committment. No indication that the partners are willing to take a lower income.
"your previous audit did not comply with the law, to comply with the law, your new audit is going to cost you 20% more, because you have to pay for our failures"
Effectively yes- they (the larger firms) over the years appear to have undercharged the necessary hours required to do the audits correctly so now they are under the microscope they will need to put in the man hours that are really needed.
Catch is the larger quoted entities really have little choice as to where to go and not convinced that a public body, say taking on all "public interest" audits, will do that much better.
Maybe we should scrap external audits but make the board of directors of larger companies collectively responsible for their issued accounts, introduce a quasi judical process /system to apportion blame where failures arise, with its own rules re evidence and proof, and bang up a few very well paid directors whilst saving me (the shareholder) my part in the audit fees- if all FTSE 100 companies paid a levy into a joint fund, next 250 at a lower rate and AIM companies also paying (maybe AIM should pay more per £1 profit) the system might improve, less checking and far more stick when the directors permit the presented accounts to fall short. (And maybe a big boost to internal audit)
I still think that if I were a plc with KPMG as an auditor I would be thinking twice.
What would my shareholders think of me staying - that there is something to hide that won't be found out or that I don't care whether the job is done properly as long as nothing falls out of the woodwork.
Nice time to increase your fees though - 'We've got fines to pay but don't want to pay it out of our own pockets so your fees are increasing.'
I think I know what my reaction would be - usually encapsulated in two words the second being 'off'. Still I suppose that it gives the client a very big leverage should they need it. Watch this space!