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KPMG to stop offering non-audit work to FTSE 350 audit clients

KPMG has made a sudden move to stop all but essential non –audit services to audit clients, according to Sky News citing a briefing note circulated by KPMG UK’s chairman Bill Michael to the partners of the firm.

The pledge to stop non-auditing work is caused by a string of accounting scandals relating to the firm.

This has made the firm first out of the Big Four, to pledge to  such a move. It would mean that KPMG would stop non-auditing services for the 90 firms from FTSE-350, where it serves as auditor.

Sky news reported that Michael’s told KPMG partners, “to remove even the perception of conflict, we are currently working towards discontinuing the provision of non-audit services (other than those closely related to the audit) to the FTSE-350 companies we audit.”

IAB contacted KPMG, which declined to disclose the memo originally reported by Sky News.

KPMG has been under scrutiny from the government and regulators, with a bid being raised to break up the Big Four.

The collapse of Carillion in January 2018 has led to serious questions by MPs as well as an investigation by the Competition and Markets Authority (CMA).

The UK Business, Energy and Industrial Strategy Committee Chair MP Rachel Reeved said in the committee meeting, following the Carillion collapse: “KPMG has serious questions to answer about the collapse of Carillion. Either KPMG failed to spot the warning signs, or its judgement was clouded by its cosy relationship with the company and the multi-million pound fees it received.”

According to data reported by The Financial Times, a number of accountancy firms dominating the UK market have in fact moved away from providing non-audit services to the accounts of the companies they audit.

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