To date Big Five firm PricewaterhouseCoopers has been the most notable offender after the JDS fined £1.2m after it admitted to 35 Complaints relating principally to its audits of three entities associated with the late Robert Maxwell. It was also ordered to pay £2.1 million towards the costs.
PwC has remained embroiled in disciplinary investigations. Currently PwC remains involoved in two JDS investigations, one relating to Price Waterhouse’s audit work for Bank of Credit and Commerce International and another concerning audit work for engineering firm Transtec.
The news comes as the European Commission prepares to lay down a new set of guidelines for auditor independence.
In November AccountancyAge.com reported that the EC was expected to recommend minimum quality requirements, which would force member countries to improve monitoring of external accountants and formed part of an overall goal of improving the financial information available in company statements.
Last year a reform package was introduced by the British Auditing Practices Board requiring auditors to report on their own independence and to take responsibility for ensuring no threat existed to their independence and objectivity.
The UK and European crackdown on auditing practices resulted from pressure from US regulator the Securities & Exchange Commission.
In December last year, SEC chairman Arthur Levitt finally launched his plans aimed at safeguarding investor confidence in financial reporting, following a year of internecine wrangling.
The SEC rules substantially limit the amount of consultancy work, large accountancy firms can offer their audit clients, resulting in a drive by the Big Five firms to sell off the consulting arms.
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