Mazars was fined £ 250,000 by the British accounting regulator for failing to audit local government by a medium-sized company.
The findings against Mazars are the latest indicator of a a growing crisis in the revision of local government accounts, which is partly blamed on a decade of austerity and a deep reduction in audit fees.
Only 9 per cent of local governments in England have published audited accounts for the financial year 2020-21 by the legal deadline of late September, raising questions about transparency and governance in the public sector.
Almost one in three audits in the sector was found to require improvement in the Council’s last annual financial reporting inspections, half of which were based on historical reports because the latter were not completed on time.
The FRC punished Mazars for violating regulations in the audit of the financial statements of an unnamed local government body for 2019.
The regulator, which oversees the quality of audits for major local authorities in England, said his implementation committee “found flaws in the audit, which it considered far below applicable standards and regulations and had the potential to undermine confidence in the standards.” General Register of Registered Auditors ”.
The fine was reduced by 20 percent from 314,000 pounds to reflect Mazars’ cooperation and recognition, the FRC said. The firm has also offered commitments to address its concerns, the supervisory body added.
The fine will raise concerns about the quality of audits by Mazars and other middle-ranking accountants hoping to gain market share from the big four companies – Deloitte, EY, KPMG and PwC – which themselves have been criticized for not raising red flags. before the collapse of companies such as outsourcer Carillion and retailer BHS.
Mazars is under investigation by the FRC for this revision of the French Connection retail while Grant Thornton has been fined £ 3 million in the last four months for auditing the Patisserie Valerie café chain and the Interserve outsourcer.
Mazars is the third largest auditor of large local governments and health authorities in England, holding 15 per cent of the market, according to the FRC.
“Since we worked closely with the FRC during its investigation, we accept and regret that the quality of our work did not meet expected standards,” Mazars said.
The firm added that it has made significant investments in its teams and processes and that all four of its audits that were included in last year’s FRC local government audits received the highest rating.