A further 57% of respondents believed that reforming the ‘big four’ audit firms – PwC, KPMG, EY and Deloitte – is a necessary step.
The poll, which surveyed more than 50 senior managers across the construction sector, found that 76% believed the Financial Reporting Council was too timid in its challenging of questionable financial information.
Mark Robinson, chief executive of Scape Group, which carried out the poll, said: “We need to be able to have faith in company accounts and the work auditors are carrying out, especially when public sector contracts and people’s livelihoods are at risk.
“Greater oversight and closer management of auditing practices [is needed] in the search to rebuild trust in the industry, but we also need to make sure we are putting in place sensible reforms that do not put increased cost pressures on an industry that is already contending with the cost of materials and reduced access to labour.”
The report from Scape Group also found that 64% of respondents thought that Carillion’s downfall was owing to debt mismanagement, acquisitions and long payment terms, created by a focus on revenue rather than profit.
The Competition & Markets Authority recently suggested that the ‘big four’ separate their audit work from the rest of their consultancy work. This move, CIPFA said, could have implications for local government.
KPMG and the FRC have been contacted for comment.
Read Dominic Brady’s feature for PF on the impact that Carillion has had on local authority outsourcing.
