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FRC to investigate KPMG and PwC

The UK Financial Reporting Council (FRC) has launched two major investigations related to audit work of two of the Big Four firms, KPMG and PwC.

The FRC will review KPMG's role in the HBOS audit and PwC's role in the audit of recently-failed retailer BHS.
The HBOS investigation comes eight years after the bank collapsed and it is to review KPMG's audit for the year ended 31 December 2007.

According to the FRC, the investigation will consider whether KPMG and PwC management's use of the 'going concern' assumption was appropriate in the preparation of the financial statements for the year ended 31 December 2007. The investigation will also consider whether there were material uncertainties about the entity's ability to continue as a going concern that needed to be disclosed in financial statements.

The FRC was less specific about its investigation of PwC in relation to recently collapsed British retailer BHS. The regulator said it has launched "an investigation under the Accountancy Scheme into the conduct of PwC in relation to the audit of the financial statements of BHS Limited for the year ended 30 August 2014".

BHS's collapse was announced in April and could mean over 10,000 job losses and a closure for more than 150 stores.
As part of the investigations both PwC and KPMG could be facing a fine if irregularities are found.

 

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