Accountancy Profession Under Siege

Angus Dent
Posted by Angus Dent on 16-Sep-2019 10:55:54

The reputations of the ‘Big4’ accountancy firms have lately taken a severe battering and, for the time being at least, the giants of a once proud profession have lost their aura of effortless superiority.

The demise of BHS in 2016 and the collapse of construction giant Carillion early last year obviously played their part in the process, but, more than a decade ago, there was the whole business of our largest High Street banks’ financial accounts being signed off when, in fact, they were technically insolvent. Despite the disastrous consequences – the Government having to step in to save RBS and Lloyds with taxpayers’ money – the auditors got away with it at the time. However, looking back now it is difficult not to conclude that, rather than rock the boat, they pocketed huge fees and in doing so, failed to fulfil their most basic function to protect the interests of shareholders and creditors. Their collective reputation for probity has been the price.

Powerful voices are now demanding that auditors be held to account, if not in the past then certainly in the future. The Financial Reporting Council (FRC) has been created as a consequence but even so, organisations like the Competition and Markets Authority (CMA) are suggesting that the Big4 should be broken up into smaller, non-conflicting chunks.  

The latest sorry episode involving Sports Direct and its unorthodox boss Mike Ashley does little to help the cause either, with the big firms apparently reluctant to take on the job of auditing the accounts lest they be tainted by association. Surely, this is just the sort of challenging job that they should be tackling – it shouldn’t always be a case of easy money. A little professional courage wouldn’t go amiss and may even help in a modest way to restore reputations.

As for Sports Direct, it does seem a little odd that a previously unidentified tax bill of over £600m has suddenly come to light, the discovery of which being enough to prompt to auditors Grant Thornton to take flight. I would have thought that a sum of that magnitude would be difficult to overlook.  Forget the auditors – what were the FD and the finance department doing? And, for that matter, aren’t large outfits like Sports Direct supposed to have healthy quota of non-executive directors on the Board to keep an eye on controlling directors?

Topics: lending, p2p, uk, alternative finance, ArchOver, carillion, Big4, Accountancy, audit, Sports Direct, auditors, financial reporting council, Mike Ashley

Recent Blogs

Search by Topic

See all

Popular Blogs

Risk Warning

Lenders: Don’t invest unless you’re prepared to lose money. This is a high-risk investment. You may not be able to access your money easily and are unlikely to be protected if something goes wrong. Interest payments are not guaranteed, if the Borrower defaults we offer no assurances that capital can be recovered. Historic returns and loan default rates are not necessarily indicative of future returns and future default rates. ISA eligibility does not guarantee returns or protect you from losses. Lending over the ArchOver platform is not covered by the Financial Services Compensation Scheme. Take two minutes to learn more and please read our P2P Guide .

ArchOver Limited is a company registered in England and Wales with company number 07235487. ArchOver Limited is authorised and regulated by the Financial Conduct Authority (Reg No: 723755).