Watchdog "stretched" across investigations workload

The UK’s audit watchdog is straining under the weight of 17 active
investigations, as it works through an unprecedented workload in the wake of the
crisis.

The Accountancy and Actuarial Discipline Board (AADB) yesterday announced a
fresh investigation into KPMG’s audit of BAE systems, the latest in a series of
weighty international investigations launched in the past twelve months.

Sources close to the AADB say staff are “stretched”, holding the small team
back from working through their cases. Since the crisis the board has launched a
number of high profile investigations touching on a number of the Big Four
including Ernst & Young’s audit of Lehman Brothers and PwC’s audit of JP
Morgan Securities.

The five man team, including three lawyers and two forensic accountants, has
been forced to outsource much of its work due to the lack of man power and
budget issues.

Outsourced work is paid for by the accounting institutes and eases the
pressure off the AADB’s internal budgets. But it can slow down investigations
and prevent the build up of internal expertise.

The AADB has a number of cases nearing completion. In one case a complaint
has been filed against a firm, although the name of the firm has not been made
public due to legal reasons. In another case a “criticism” letter has been sent,
the first stage in a final complaint being filed. The body is also on the verge
of sending out an additional two other “criticism” letters.

The AADB also has other cases, expected to be announced in coming months.

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