HSBC’s $94m-a-year audits may not be enough to woo Big Four accountants
Fears that the UK’s biggest lender will struggle to attract the Big Four accounting firms have been stoked as HSBC prepares to tender the audits of its accounts next year, according to reports.
The heads of HSBC reached out to the Big Four auditors but found they were reluctant to bid for the bank’s audits from 2025, according to the Financial Times, which first reported the news.
The news comes a week after the UK accounting watchdog found that an “unacceptably high” number of audits in the UK still need improving.
The annual report by the Financial Reporting Council (FRC) found that 33 per cent of all audits still needed improvements – likely providing further reason for auditors to be particularly wary of high-risk jobs that could land them in further trouble, after a number of accounting scandals have hit the sector in recent years.
Possible conflicts with consulting projects, and the high numbers of resources needed were some of the reasons flagged by the auditors for their reticence with the HSBC.
The sprawling size of the multinational bank, which has 40m customers globally across 64 countries and territories, was another cause for concern for the accounting firms. The bank’s audits will require significant resources, technology, and risks for auditors.
HSBC’s progress to find an auditor, following the end of PwC’s contract after ten years in 2025, is likely to be carefully monitored, as the bank represents one of the biggest audits, worth an estimated £1bn over a decade, for a London-listed company.
Although all of the Big Four company contenders – EY, Deloitte and KPMG – have provided consulting services to HSBC there is some concern that displacing PwC as its current auditor will be a futile endeavour as the accounting giant reportedly plans to pitch during the tender process.
Meanwhile HSBC has reportedly also reached out to ‘challenger’ audit firms outside of the Big Four accounting giants, but the scale of its audit, and the risk for auditors, means mid-tier firms are unlikely to pitch to replace PwC in reviewing the whole group.