Earlier this year, the Big Four accounting firms — PwC, Deloitte, EY, and KPMG — admitted to hundreds of violations related to auditor independence in accordance with new disclosure rules in the US.
These breaches included financial and employment relationships that could have compromised audit integrity. PwC reported 129 violations affecting 74 clients in 2022. Deloitte identified 129 breaches across 78 clients in 2022, with another 107 in 2023. EY, for its part, found independence issues in 3% of its 2022 audits.
Notably, at the time, KPMG was the only Big Four firm that had not disclosed its figures. However, in the Public Company Accounting Oversight Board's (PCAOB) inspection report for 2022, the regulator wrote that the firm had identified 24 instances across 19 issuers. And the PCAOB's 2023 inspection results showed that KPMG had identified 219 violations across 97 issuers — representing about 9% of its 2023 audits.
"Auditor independence underpins the integrity of our capital markets and is essential to ensuring investors can trust the financial statements they rely on to make decisions," a spokesperson for PCAOB said. The firms asserted that none of the violations compromised their audit independence.
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