The infiltration of EY, Deloitte, KPMG and PwC in government departments has been well documented. What is less well known is their role in the private sector, where experts fear a sleeper issue could trigger a corporate collapse, writes Adele Ferguson.
Alarmingly, while the big four have been dominating auditing, corporate watchdog ASIC has found the quality of auditing is declining. It is something Professor Allan Fels told 7.30 is a sleeper issue that could trigger a corporate collapse.
"When it doesn't do that, because there are deficiencies in the audits themselves, then the system breaks down."Auditing plays a crucial role in the integrity of the financial system. Banks, investors, staff, suppliers and superannuation funds all rely on an auditor's independent assessment of financial accounts to ensure they can be trusted to make informed decisions.
She will also look at why ASIC decided as part of a restructure it would abandon inspection reports, shrink the audit team and dump its highly regarded chief accountant, Doug Niven. Ownership Matters found that non-audit fees as a proportion of audit work for the audit firms was 39 per cent across the ASX300 companies between 2018 and 2022. This is where the big four act in the dual role of independent auditors and consultants, which is fraught with conflicts of interest.Construction and developing giant Lendlease has had KPMG as its independent auditor for more than 65 years and their head offices are in the same building in Sydney.
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