Big Five rivals PricewaterhouseCoopers and KPMG have been rocked by a fresh round of accounting scandals which could expose them to potential legal action by disillusioned creditors.
PwC has announced its resignation from Asian-owned Meghraj Bank after qualifying its accounts, filed this month at Companies House, over previously undisclosed directors’ loans, and difficulties in auditing offshore connections.
KPMG, meanwhile, is investigating accounting irregularities at GEI Autowrappers, a subsidiary of GEI International, a packaging machinery manufacturer. The company has revealed a profit shortfall of £3m.
In both cases, the future of the businesses have been thrown into doubt by the irregularities.
A technical specialist with another Big Five firm warned any losses hidden in published accounts could lead to costly legal action against auditors from creditors.
He added: ‘There is not much PwC can do. They must have doubts about the past accounts and be hoping that nothing comes out of the woodwork.’ PwC has been auditor of the bank for ten years.
The scandals could also be bad news for finance directors of the two businesses.
Michael Bissell is FD of GEI International, while Michael Howell is FD of Meghraj Bank.
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