AFM fined ‘Big Four’ accountants – Financieele Dagblad

(Photo: HH)

the Financial Markets Authority has handed out fines to the four major accounting firms Deloitte, EY, KPMG and PwC. The so-called ‘Big Four’ offices have failed in controlling the corporate financial statements for 2012, and in some cases in 2011.

the AFM calls the violations” serious “and justified the fines. EY gets the greatest penance. € 2.2 million Deloitte have to pay € 1.8 million, € 1.2 million, KPMG and PwC € 0.8 million

Insufficient support

research by the regulator in 2014, revealed that the four stabbing dropped at the controls of some accounts. The criticism is that the auditors did not sufficiently support the audit reports. Nearly half of the files examined, there was inadequate supervision and lack of internal controls, the AFM concluded.

According to the supervisor have offices thereby acted contrary to the law, so investors, creditors and other interested parties could not rely on the judgment of the auditor. The supervisor checked records of some AEX companies, but also include smaller listed companies, pension funds and public institutions.

All four offices let in a reaction that the rejected cases have re-evaluated. Although this led in some cases to ‘repair’, but in any case the auditors saw reason to withdraw the issued auditor’s report.

Uncertainty duty

Not all firms agree with the penalty. PwC will in principle only natural that following a sanction from the AFM, but have fundamental objections to the foundation thereof. “The AFM bases its position on the failure to meet the duty of care,” the auditor wrote in a statement. “However, what is still lacking is clarity about the relationship between the duty of the audit firm and quality findings in individual audit files.” PwC is considering possible further steps.

also EY says to want the AFM talk about his interpretation of the statutory duty of care. But EY, the highest fine to pay, says the financial penalty for not end for another reason. Namely the group given the highest fine, while the four firms had the least number of cases where control remained in default.

the AFM found three out of ten audit files EY below par. Deloitte and PwC were that four out of ten, and at KPMG even seven out of ten. EY will find the fine, therefore, does not reflect the findings of the AFM.

Upgrade

It is not the first time that the major accounting firms to be fined. In a study in 2010 suggested the AFM already defective by its audits by Deloitte, KPMG and EY, but they subsequently fines. Responded companies still angry at the harsh conclusions of the regulator in 2010, now endorse all four criticism.

“We give absolute priority to improving the quality of our controls in the present and the future, “says KPMG board member Egbert Eeftink. “This knowing that the impeccable quality of our audit work is needed to restore public confidence in us.”

PwC highlights however, that fines alone are not enough to enforce improvements, but that a “fundamental transformation” is necessary. “The responsibility for achieving this transformation rests with us. We are confident that we can do this in close cooperation with inter alia the AFM.