The world’s four biggest audit firms —KPMG, PwC, Ernst & Young, and Deloitte — have been directed by the Financial Reporting Council (FRC) to plan towards separating their audit services from their consulting services.
The deadline for compliance with this directive is June 2024.
A statement that was published on the FRC website said this directive is ‘world-leading’. The statement also explained why it became imperative to separate the firms’ operations towards ensuring that they deliver the uttermost quality audit services for the good of public interest.
By the time the operational separation officially takes effect starting from June 2024, FRC said it would be expecting the following outcomes:
- That audit practice governance would prioritise audit quality and protect auditors from influences from the rest of the firm that may try to divert their focus away from audit quality.
- That the total amount of profits distributed to the partners in the audit practice does not persistently exceed the contribution to profits of the audit practice.
- The culture of the audit practice prioritises high-quality audit by encouraging ethical behaviour, openness, teamwork, challenge and professional scepticism/judgement.
- Auditors act in the public interest and work for the benefit of shareholders of audited entities and wider society.
While commenting on this development, FRC’s Chief Executive Officer, Sir Jon Thompson, said the FRC is committed to reforms on how corporate finances are reported. Further aspects of the reform package will be introduced over time, he said.
“Operational separation of audit practices is one element of the FRC’s strategy to improve the quality and effectiveness of corporate reporting and audit in the United Kingdom following the Kingman, CMA and Brydon reviews. Today the FRC has delivered a major step in the reform of the audit sector by setting principles for operational separation of audit practices from the rest of the firm. The FRC remains fully committed to the broad suite of reform measures on corporate reporting and audit reform and will introduce further aspects of the reform package over time,” Thompson stated.
Do note that the FRC reached this decision after engaging in extensive discussions with the Big Four. It was also agreed that the audit firms will submit an implementation plan to the FRC latest by October 23rd, 2020.
Recall that it was just last week when Nairametrics reported how the Big Four earned the sum of N7.53 billion as audit fees from Nigeria’s most capitalized firms in 2019. Interestingly, these firms now reportedly generate the largest portions of their revenues from consultancy services. As a matter of fact, only about 20% of their revenues now come from auditing fees.
Reasons why a record number of people are giving up their US citizenship
These citizens complain of the current political climate while others attributed their decision to taxes.
A new report that was published on Sunday, August 10, 2020, has shown that a record number of people are giving up their United States citizenship. The report suggests that Americans are continuing to renounce their citizenship at the highest levels on record.
This information is contained in a research report that was conducted by Bambridge Accountants, a New York-based firm that specializes in US expatriate tax, UK expats, actors, and other creatives in the US and the UK.
According to the report, more than 5,800 American citizens gave up their citizenship in the first six months of 2020, compared to the 2,072 Americans who renounced their citizenship throughout 2019. The report also noted that the Coronavirus pandemic had motivated US expats to cut ties and avoid the current political climate and onerous tax reporting.
A partner at Bambridge Accountants, Alistair Bambridge, in his conversation with CNN, said, “These are mainly people who already left the US and just decided they’ve had enough of everything. What we’ve seen is people are over everything happening with President Donald Trump, how the coronavirus pandemic is being handled, and the political policies in the US at the moment.”
Bambridge, in its report, also stated that while many people who renounced their citizenship complain of being unhappy with today’s current political climate in the US, others attributed their decision to taxes.
He disclosed that US citizens living abroad are still required to file tax returns every year, report their foreign bank accounts, investments, and pensions. Although these citizens benefited from the $1,200 stimulus checks and $500 for each child, many of them felt that the annual US tax reporting is just too much.
The report also stated that Americans who want to relinquish their citizenship are required to pay $2,350 and appear in person at the US embassy in their resident country if they are not in America.
There are currently about 9 million US expats across the world, even as trends have shown a sharp decline over the last few years of US citizens expatriating.
Download the Nairametrics News App
Despite the risks that come with giving up US citizenship, Bambridge predicts that the trend will only continue going up.
He said, “A lot of people are waiting for the November election to see what’s going to happen. If President Trump is reelected, we believe there will be another wave of people who will decide to renounce their citizenship.”
IMF assessing additional tools to provide aid to pandemic-hit countries
The IMF had earlier noted that the Nigerian economy would witness a deeper contraction of 5.4%.
The International Monetary Fund (IMF) noted that it is reviewing additional tools to help provide financing to poorest countries of the world as well as others that have been hit hard by the coronavirus pandemic. This was noted by the Fund’s Managing Director, Kristalina Georgieva.
The IMF had reduced its projections for the world economy, projecting a GDP growth of 5.4% in 2021 compared to 5.8% in its earlier forecasts as a result of the expected challenges to global value chains due to the coronavirus pandemic which has affected the global demand for goods and services. It had also reviewed its projection for Nigeria, noting that the Nigerian economy would witness a deeper contraction of 5.4% and not the 3.4% that it has projected in April 2020.
Explore Nairalytics, the Nairametrics research website
Georgieva explained to finance ministers and central bank governors from the Group of 20 major economies in the world that they should consider extending a freeze in the official bilateral debt service payments that have been offered to the poorest countries beyond the end of 2020, and seek out better ways to promote private-sector participation.
She also noted that there is ardent need to think about “more comprehensive debt relief for many countries,” as a result of the severity of the crisis as well as the already high debt load that many of the respective countries already had to deal with.
UK and allies accuse Russia of hacking and stealing COVID-19 vaccine data
UK said that vaccine and therapeutic sectors in multiple countries have been targeted by Russian state intelligence.
The UK and its allies have accused Russian state intelligence of hacking international research centres that are in a race to develop a vaccine for COVID-19. The UK, US and Canada on Thursday, said that Russian intelligence is attempting to steal information on those vaccines through irresponsible cyberattacks.
It is, however, unclear if the research facilities have been damaged or if the vaccine programmes have been set back as a result of the hacks but the officials warned that the cyber-attacks are ongoing.
UK’s National Cyber Security Centre (NCSC), said that vaccine and therapeutic sectors in multiple countries have been targeted by a group known as APT29, which it said is almost certainly part of Russian state intelligence. Security agencies in the U.S. and Canada later issued their own statements backing up the findings. Russia denied involvement.
The British Foreign Secretary, Dominic Raab, said, ‘’It is completely unacceptable that the Russian intelligence services are targeting those working to combat the coronavirus pandemic. While others pursue their selfish interests with reckless behaviour, the U.K. and its allies are getting on with the hard work of finding a vaccine and protecting global health.”
The Russians have however denied the allegations by the UK and its allies.
In an explanation to Bloomberg, the Russian spokesman said, ‘’We don’t know who may have hacked pharmaceutical companies and research centers. We can only say Russia has nothing to do with these attempts. We don’t accept such accusations.’’
The NCSC said APT29, which is also known as Cozy Bear or The Dukes, has targeted U.K., U.S. and Canadian vaccine research and development organizations. They said the campaign of malicious activity is ongoing, predominantly against government, diplomatic, think-tank, healthcare and energy targets to steal valuable intellectual property.
A cybersecurity firm, Carbon Black, in a published analysis in March, said researchers have long linked APT29 to Russian intelligence agencies as for more than a decade, the group has carried out hacking campaigns that have targeted dozens of governments, research institutes, and corporations around the world.
The British claims were supported by partners at the Canadian Communications Security Establishment (CSE), the US Department for Homeland Security (DHS), Cybersecurity Infrastructure Security Agency (CISA) and the National Security Agency (NSA).
The NSA said organizations in the U.S. involved in vaccine development were also targeted by the hackers with the objective of the hacking and stealing information and intellectual property relating to the development and testing of Covid-19 vaccines.
The Canadian government said they are working with Westminster and Washington to stop these cyber-attacks.