KPMG currently audits around 50% of the UK’s building societies (mutual lenders) but this is set to decline to around 30% as a result of the mandatory rotation of audits – a significant drop but a figure that still leaves the firm the dominant player in this market-place, according to sources within the firm.
Sky News, citing ‘insiders’ at the firm, reports that KPMG has ‘decided to resign audit work for about half a dozen smaller mutuals because of the rising cost of compliance and reputational risks’ adding that ‘the auditor was imposing substantial fee hikes on a number of its small building society audit clients, reflecting the greater scrutiny on auditors’.
Rules set up in 2014 by the Competition & Markets Authority stipulate that all UK ‘public interest entities’ rotate their statutory auditor after a maximum period of twenty years, with a mandatory tender at the ten year midpoint.
