'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.'
Alarmingly, while the big four have been dominating auditing, the 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.
Accounting professor John Dumay described it as a market failure. "To me, the value out of the audit is to be able to go to the investor and say, 'we have a good company, we're performing well, the auditors come and have given us a tick in a box, a clean bill of health, you can trust what we've got to say.' That's what an audit is supposed to do," he says.
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 acted 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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