Big Four U.K. face break up
Executives from the Big Four, Grant Thornton and BDO in the United Kingdom are preparing for a potential break-up of their businesses, amid the quality of work done by both auditors and consultants being criticized following recent high-profile corporate collapses, the Financial Times reported. A recent report called on the U.K. government to refer the Big Four to the Competition and Markets Authority for potential break-up, or to split the firms’ audit functions from non-audit services. Bill Michael, Chairman of KPMG’s U.K. business, said the current business model is unsustainable. “I can’t believe the industry will be the same [in the future]. We have to reduce the level of conflicts and . . . demonstrate why they are manageable and why the public and all stakeholders should trust us.”
Barclays cuts ties with KPMG South Africa
Barclays Africa Group Ltd was the first major South African bank to drop KPMG as one of its auditors, Accounting Today reported this month. This decision follows the controversy surrounding the firm involving work done for the politically influential Gupta family. KPMG said it was disappointed but accepts Barclays decision. “We have implemented far-reaching changes over the past seven months to all aspects of the firm including governance, quality, and risk management,” KPMG said in a statement. In April 2017, two KPMG auditors failed to disclose loans from VBS Mutual Bank, which they were auditing, leading to the termination of all government contracts with KPMG by South Africa’s Auditor-General.
Deloitte strengthens cyber-security defence
Deloitte plans on spending US$580 million on its cyber security defences over the next three years in a bid to tackle “evolving” and “persistent” cyber threats. It also follows mounting pressure on the Big Four to prevent attacks that could jeopardize client data. This decision comes after Deloitte faced a high-profile cyber breach last year, where hackers accessed data on one of the firm’s email platforms, affecting a small number of its clients. Larry Quinlan, Deloitte’s Global Chief Information Officer, told the Financial Times: “Cyber-threat management is a fundamental part of doing business today and requires more than just the right technology and infrastructure. It requires the right behaviour as well.”
PwC launches new FinTech software
PwC in Mainland China and Hong Kong will release a software product in the FinTech space powered by artificial intelligence. Intelligent Archive is PwC’s compliant mobile messaging tool with chatbot technology that can securely record and archive business conversations, said the firm. It allows companies to comply with regulatory requirements that stress the importance of compliance monitoring and centralized record-keeping of client orders through instant messaging applications. “To accommodate their clients’ communication preferences, many banks are exploring how to effectively use these applications, whilst also meeting regulatory archiving requirements,” Andrew Watkins, Technology and Disruption Leader of PwC China and Hong Kong, said.