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The UK’s accounting regulator has criticised BDO and Forvis Mazars for shortcomings in their audits for the fourth straight year, and threatened to take “stronger action” against them if there was no improvement.
In its annual review of audit quality published on Tuesday, the Financial Reporting Council said the gap between the Big Four — Deloitte, EY, KPMG and PwC — and the mid-tier firms had widened.
The declining quality of BDO and Forvis Mazars’ work underlines the challenge mid-tier accounting firms face as they try to wrestle market share from the dominant Big Four.
“Disappointingly, BDO and Forvis Mazars’ performance has fallen significantly below our expectations,” said Sarah Rapson, executive director of supervision at the FRC. “Both firms are strategically important to the UK audit market and the wider UK economy, so it is vital that they deliver on their agreed improvement plans.”
The regulator said it would continue to apply “more intensive supervision”, adding, “we may take stronger action, which could include using our PIE [public interest entity] auditor registration powers, if we do not see improvements in 2025”.
Paul Eagland, managing partner at BDO, said the firm was “deeply disappointed” with its results this year. He added: “Comprehensive actions and plans, shared with our regulators, have been and are being implemented to address each of the areas identified.”
Forvis Mazars did not immediately respond to a request for comment.
An earlier incorrect image in this article was replaced after first publication.
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