Thu. Jan 20th, 2022

Mazars has been fined £ 250,000 by the British accounting regulator for failures in the mid-level firm’s audit of a local government authority.

The findings against Mazars are the latest indication of a growing crisis in the audits of local government accounts, which was partly blamed on a decade of austerity and deep cuts in audit fees.

Only 9 per cent of local government bodies in England published audited accounts for the 2020-21 financial year by the statutory deadline at the end of September, which created questions about transparency and governance in the public sector.

It has been found that almost one in three audits in the sector requires improvement in the Financial Reporting Board’s latest annual inspections, half of which are based on historical accounts because the most recent were not completed on time.

The FRC fined Mazars for violating regulations in its audit of the 2019 financial statements of an unnamed local government authority.

The regulator, which oversees audit quality for major local authorities in England, said its implementing committee had “found failures in the revised audit, which it said were far short of the applicable standards and regulations and had the potential to boost confidence in the standards”. to undermine “general of registered auditors”.

The fine was reduced by 20 per cent from £ 314,000 to reflect Mazars’ co-operation and admissions, the FRC said. The firm also offered businesses to address its concerns, the watchdog added.

The fine will raise concerns about the quality of audits by Mazars and other mid-level accountants hoping to gain market share from the Big Four firms – Deloitte, EY, KPMG and PwC – which have themselves been criticized for not raising red flags before the collapse of companies such as the outsourcer Carillion and retailer BHS.

Mazars is being investigated by the FRC over its Retail Audit French Connection while Grant Thornton has been fined £ 3 million over the past four months over his audits of cafe chain Patisserie Valerie and outsourcer Interserve.

Mazars is the third largest auditor of major local government authorities and health bodies in England, with 15 per cent of the market, according to the FRC.

“After working closely with the FRC throughout the investigation, we accept and regret that the quality of our work did not meet the expected standards,” Mazars said.

The firm added that it has made significant investments in its teams and processes and that all four of its audits included in last year’s FRC local government audit inspections have received the highest ranking.

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