PracticeAuditPwC may abandon uneconomic audits

PwC may abandon uneconomic audits

PricewaterhouseCoopers has become the first Big Four firm to sound a stark warning over the future of audits saying it may 'walk away' from uneconomic audits.

Link: PwC acts to limit risk on audit reports

Samuel DiPiazza, PwC’s global chief executive, has indicated that his firm would not work for companies that are not willing to pay higher audit fees.He added that the firm could also drop clients that did not want to pay for enhanced assurance services, such as risk assessment.

The warning comes in the wake of the Enron scandal and the collapse of one of the world’s largest global audit firms Andersen and highlights audit firms’ growing concern over the risk:reward ratio in audit work.

DiPiazza told the FT: ‘If we have an audit client unwilling to pay what we feel are fair audit fees or that restricts our scope of services to the point where we are concerned about the quality of that audit – either of those can cause us to walk away from that relationship.’

DiPiazza also criticised the extraterritorial reach of the notorious Sarbanes- Oxley Act which he said may also force audit firms to abandon work at US-listed companies.

Separately, he gave a boost to the principles based accounting system and international accounting standards saying the US would have to give up many of its accounting rules and its rules-based accounting system.

Related Articles

KPMG South Africa to review past audit work amid fresh scandal

Audit KPMG South Africa to review past audit work amid fresh scandal

6d Alia Shoaib, Reporter
FRC introduces £10m sanctions for Big Four firms

Audit FRC introduces £10m sanctions for Big Four firms

2w Alia Shoaib, Reporter
Ukraine’s PrivatBank files $3bn claim against PwC

Audit Ukraine’s PrivatBank files $3bn claim against PwC

3w Alia Shoaib, Reporter
Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

Audit Grant Thornton to exit FTSE 350 audit market, citing Big Four dominance

3w Alia Shoaib, Reporter
Big Four dominate FTSE 250 audit market in Q1 rankings

Audit Big Four dominate FTSE 250 audit market in Q1 rankings

2m Alia Shoaib, Reporter
Deloitte to pay $149.5m over Taylor, Bean & Whitaker audit failure

Audit Deloitte to pay $149.5m over Taylor, Bean & Whitaker audit failure

2m Alia Shoaib, Reporter
Carillion inquiry: missed red flags, aggressive accounting and the pension deficit

Audit Carillion inquiry: missed red flags, aggressive accounting and the pension deficit

2m Alia Shoaib, Reporter
Deloitte’s audits of Hezbollah-linked bank to be examined by Dubai court

Audit Deloitte’s audits of Hezbollah-linked bank to be examined by Dubai court

2m Alia Shoaib, Reporter