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The UK’s accounting regulator has criticised BDO and Forvis Mazars for shortcomings of their audits for the fourth straight 12 months, and threatened to take “stronger motion” towards them if there was no enchancment.
In its annual overview of audit high quality revealed on Tuesday, the Monetary Reporting Council mentioned the hole between the Huge 4 — Deloitte, EY, KPMG and PwC — and the mid-tier companies had widened.
The declining high quality of BDO and Forvis Mazars’ work underlines the problem mid-tier accounting companies face as they attempt to wrestle market share from the dominant Huge 4.
“Disappointingly, BDO and Forvis Mazars’ efficiency has fallen considerably beneath our expectations,” mentioned Sarah Rapson, government director of supervision on the FRC. “Each companies are strategically essential to the UK audit market and the broader UK economic system, so it’s important that they ship on their agreed enchancment plans.”
The regulator mentioned it will proceed to use “extra intensive supervision”, including, “we could take stronger motion, which may embody utilizing our PIE [public interest entity] auditor registration powers, if we don’t see enhancements in 2025”.
Paul Eagland, managing associate at BDO, mentioned the agency was “deeply disillusioned” with its outcomes this 12 months. He added: “Complete actions and plans, shared with our regulators, have been and are being applied to handle every of the areas recognized.”
Forvis Mazars didn’t instantly reply to a request for remark.
