The accountancy firm KPMG will stop providing non-audit services to big listed companies whose finances they are inspecting after coming under intense pressure over perceived conflicts of interest.
Bill Michael, KPMG’s UK chair, said the firm would stop providing non-audit services for FTSE 350 companies “to remove even the perception of a possible conflict”, in a memo to partners sent on Thursday. The firm declined to give an end date for the changes.
It will continue to offer often lucrative non-audit services, such as consultancy, to smaller UK-listed clients, as well as private firms of all sizes.
KPMG’s move comes amid calls for the break-up of the largest accountancy firms. There are currently five major ongoing inquiries into audits, after a slew of corporate scandals in which auditors failed to spot major problems in the finances of companies such as retailer BHS and construction giant Carillion. KPMG was heavily criticised for its audit of Carillion before its failure at the start of the year.
The firm and its big four rivals Deloitte, EY and PwC dominate the audit market for large firms in the UK. The big four carried out more than 95% of the audits for FTSE 350 firms last year, according to figures from the Financial Reporting Council.
KPMG currently earns less of its income from non-audit services than its rivals. In the year ending September 2017, it earned £79m in non-audit fees and £198m in audit.
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