UK regulator flags Big Four's offshore audit model

Regulation

โดย The Accountant·Read original

Summary · why it matters

The UK's Financial Reporting Council has raised concerns over the Big Four accounting firms' growing reliance on offshore teams for audit work requiring professional judgement. In its annual quality report, the FRC noted a shift from using overseas staff mainly for routine tasks to involving them in judgement-based work through extended team models developed over more than a decade by Deloitte, EY, KPMG and PwC, particularly via large operations in India. KPMG UK's latest transparency report showed around a quarter of its audit practice staff are based offshore. The regulator also highlighted PwC's identification of a small number of cases where overseas member firms carried out non-audit work for audit clients without required UK approvals, prompting a detailed internal review and a commitment from PwC to elevate the issue to a higher priority. The FRC said it would monitor how the largest firms manage their extended team models over the next year and prioritise reviewing PwC's arrangements for approving non-audit services provided by network companies.

Impact on stocks 0

Off-coverage companies 4

PricewaterhouseCoopersPrivate▼ Negative

Regulationrelevance

FRC flags PwC's non-audit work for audit clients without UK approvals, prompting a detailed review and higher priority.

KPMG InternationalPrivate± Mixed

Regulationrelevance

FRC flags KPMG's reliance on offshore staff (25% of audit practice) for judgement-based work, with monitoring ahead.

Deloitte Touche Tohmatsu LimitedPrivate± Mixed

Regulationrelevance

FRC raises concerns over Deloitte's extended team model using offshore staff for judgement-based audit work.

Ernst & Young Global LimitedPrivate± Mixed

Regulationrelevance

FRC raises concerns over EY's extended team model using offshore staff for judgement-based audit work.