UK regulators have begun investigating accounting firm Mazars over its audit of retailer French Connection’s financial statements, reported the Financial Times.
The Financial Reporting Council announced on Wednesday that it had launched an investigation in July into the fashion brand’s accounts for the year ending January 31 2020. Mazars is one of the biggest challengers to the UK’s dominant Big Four accountants: Deloitte, EY, KPMG and PwC.
It said it was co-operating with the regulator but declined to comment further while it was being investigated. The investigation is a potential blow to the credibility of the mid tier of accounting firms.
The UK government wants to bolster their share of the audit market to increase competition to the Big Four after a string of corporate scandals, including at outsourcer Carillion and retailer BHS.
It is the latest in a series of FRC investigations into work by mid-tier firms and follows the announcement on Monday of a separate probe into Crowe, another midsized accountant, over its audits of music streaming business Akazoo, whose independent directors last year alleged fraud by former management. Crowe said it was co-operating with the FRC and took audit quality “very seriously”.
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