Mazars fined for errors in local government audit

Mazars was fined £250,000 by the British accounting regulator for failing to audit local government agencies.

The result of the investigation against Mazars is The crisis of local government account audit is getting worseThis is partly due to ten years of austerity policies and drastic cuts in audit fees.

Before the statutory deadline at the end of September, only 9% of local government agencies in England published their audited accounts for the 2020-21 fiscal year, which raised questions about the transparency and governance of the public sector.

Almost one-third of the industry’s audits were found to need to be improved in the most recent annual review by the Financial Reporting Board, half of which were based on historical accounts, because the most recent audit was not completed on time.

The FRC fined Mazars for breaching regulations in an audit of the 2019 financial statements of an unnamed local government agency.

The supervisory body responsible for overseeing the audit quality of the larger local authorities in England stated that its enforcement committee “found failures in the audits it reviewed. It believes that the applicable standards and regulations are far from being met and may undermine confidence in the standards.” General Rules for Registered Auditors”.

The FRC stated that the fine was reduced by 20% from £314,000 to reflect Mazars’ cooperation and admission. The regulator added that the company also pledged to address its concerns.

The fines will exacerbate concerns about the audit quality of Mazars and other mid-level accountants who hope to gain market share from the Big Four accounting firms (Deloitte, Ernst & Young, KPMG, and PricewaterhouseCoopers). In 2019, companies such as outsourcer Carillion and retailer BHS went bankrupt.

FRC is investigating Mazars Audit of retailer French Connection In the past four months, Grant Thornton has been fined £3 million for auditing the coffee chain Patisserie Valerie and outsourcer Interserve.

According to FRC data, Mazars is the third largest auditor of large local government agencies and health agencies in England, with a 15% market share.

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

The company added that it has invested heavily in its team and processes, and all four audits included in the FRC local government audit inspection last year received the highest rankings.

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