MPs ask Big Four for FTSE 350 hospitality data
The Big Four have been asked to give MPs details of their spending on hospitality and entertainment for FTSE 350 clients, along with details of staff targets and progression, as part of the Department for Business, Energy and Industrial Strategy (BEIS) committee inquiry into audit quality
20 Feb 2019
Select committee chair Rachel Reeves has written to the heads of Deloitte, PwC, EY and KPMG with a series of questions, following their appearance at an evidence session at the end of January.
The firms are asked to supply information for each year of the last five years about the percentage of FTSE 350 audits which cost more than 10% over the original budget. For those that did cost more, they are asked how many were taken up with the audit committee, and whether the firm successfully renegotiated fees.
Reeves poses three questions about client hospitality and entertainment spending: how much each firm spent overall on FTSE 350 clients and how many events in each of the last five financial years; how much was spent on non-audit clients who subsequently became audit clients over the same timeframe; and for each new FTSE 350 client taken on in that period, how many hospitality and entertainment events they were invited to before becoming a client.
The letter requests information about the target set for senior audit managers to progress to partner level, and asks for progression letters and appraisals to illustrate the targets used and how they are assessed.
Reeves also wants details of how audit staff remuneration and progression is affected by audit quality issues, and asks if a firm’s internal reviews of audits change audit outcomes and whether they have examples of this.
The committee chair asks the firms to confirm they will be collating and publishing their pay ratios and pay quartiles in relation to gender and BAME next year, and to provide details if they already have this data.
Finally, the letter requires firms to list the technology they share with their network’s member firms in other countries.
The Big Four have until 27 February to respond to the BEIS committee requests.
Report by Pat Sweet