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    HSBC faces struggle to attract bids from Big Four auditors

    HSBC bosses have banked into some of the UK’s largest accounting firms after the initial outreach to candidates has suggested that many big four accounting firms are hesitant to take on that role. I’m afraid to struggle to convince you to bid for an audit of $ 94 million a year.

    The UK’s largest lender is preparing to bid for audits from 2025 next year, people familiar with the matter told the Financial Times.

    HSBC has been audited by PwC since 2015, and PwC is eligible to bid for another 10 years in this role.

    However, banks already expect it to be difficult to attract sales from the other four major accountants (Deloitte, EY, KPMG). This is because some candidates have expressed concern about the potential competition for profitable consulting projects and the amount of resources needed to audit them. The problem said.

    The number of jurisdictions operated by HSBC, the resources and technology required, and the associated risks are all issues in attracting auditors to bids, one said.

    Auditors are cautious about taking on jobs that could result in large fines if things go wrong.They raised their rates and Away from hundreds of clients They consider it risky.

    HSBC audits are one of the largest and most complex for London-listed companies and can cost around $ 1 billion over a 10-year period, so bids are carefully monitored.

    “When people are talking about declining a $ 1 billion deal, you know it’s bad,” one quoted from rising pressure on large audit firms. “It doesn’t happen in any other industry.”

    HSBC will be one of the first audits awarded by a major UK financial institution in the second wave of compulsory bidding once every 10 years. European auditor rotation rules It caused turmoil in the 2010s.

    Deloitte, EY, and KPMG all provide consulting services to HSBC, but auditors have decided that banks should start their investigations early to eliminate most conflicts with their advisory operations by 2025. He said he should leave enough time for the new company.

    Rival accounting firms are also concerned that current auditor PwC will be a favorite for winning contracts. People who know this issue said PwC intends to market.

    Therefore, investing time and resources in marketing may not be attractive to rivals, the senior auditor said.

    “If it’s a very expensive bid and they’re happy with PwC, why would we bid?” Said a partner at another Big Four accounting firm.

    The new auditing company must also carry out a long-term and costly process of transferring the company’s bank account and partner’s loan agreement held with HSBC to another bank to avoid possible conflicts. Someone said he would have to.

    The two big four partners are Barclays auditor KPMG from the UK accounting regulator. “Unacceptable” quality of bank audits..

    “KPMG puts a little pressure on bank audits, so is it a viable bid?” Said one of our partners.

    According to two people who are aware of this issue, HSBC has urged the big four small challengers to decide whether they can audit their financial statements.

    The senior auditors of the two challengers said mid-sized companies would not propose to audit the entire HSBC Group due to their size and associated regulatory risks.

    HSBC paid PwC $ 130 million in audit and related costs last year. The annual report shows that it outperforms UK-wide audit revenues for challengers other than BDO and Grant Thornton.

    But the UK government has become a large publicly traded company Pass audits of some subsidiaries to Challenger, Said one auditor.

    HSBC declined to comment except confirming that it would begin the bidding process next year. Deloitte, EY, KPMG and PwC all declined to comment.

    HSBC faces struggle to attract bids from Big Four auditors Source link HSBC faces struggle to attract bids from Big Four auditors

    The post HSBC faces struggle to attract bids from Big Four auditors appeared first on California News Times.

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