Monday 20 January 2020

"One in five UK businesses ‘financially stressed’, says KPMG"

From Accountancy Today:

One in five UK businesses are "financially stressed", according to new research from KPMG's restructuring practice.

The practice analysed the filings of all UK businesses with revenues over £10m in the five year period to the end of 2018. Trading performance, profitability, cashflow, liquidity and debt leverage were all analysed to produce a score to identify financial stress and distress among these businesses.


What KPMG fail to mention is that their rapacious audit fees (monopoly rent) are a major contributor towards their clients' financial stress, taking one or two per cent of turnover on average.

14 comments:

ThomasBHall said...

"1 or 2% of turnover on average" Really! That is outrageous!

Lola said...

TBH. Yep.

Lola said...

TBH. That's what 'special privileges' gets you.

formertory said...

"One in five UK businesses is "financially stressed"..."

There, that's better.

I have the uneasy feeling that a large black weight bearing the mark "16 Tons" is hanging there over my head, but one question springs to mind; if 2% of turnover is pretty much a whinger's non-event when it's called Business Rates, why is it a big deal when it's called "audit fees"?



Mark Wadsworth said...

Ft, because a business gets something in return for BR - a more favourable location and public services. You can improve profits by £2 for every £1 spent on BR. Audit fees are a straight cost/transfer of wealth. They are like privately collected VAT.

Dinero said...

I am not surprised it is one in five. If a company is not a monopoly and receiving monopoly profits, then , due to competition, it is dynamically managing its revenue and expenses.

Graeme said...

There is also the question of the worth of an audit. If you look at the accounts of the last couple of big failures, my immediate question was who signed these off? Carillion - massive and growing amounts of trade debtors plus a CEO and CFO who had recently left after trousering huge bonuses and the new incumbents had triggered an investigation into contract profitability. Patisserie Valerie - inconceivable profit margins and a lack of cash. Purecircle - a food company with more than a year's worth of sales held in stock. And their most recent accounts were "true and fair".

Mark Wadsworth said...

Din, good point.

G, exactly!

Bayard said...

G, who pays the auditors and who benefits from the blind eye turned to the company's problems? Are they not one and the same? Are you expecting the likes of KPMG to have principles?

Mark Wadsworth said...

B, it's worse than that. Who charges massive fees for restructuring, administration and insolvency? The likes of kmpg. Heads they win...

Mark Wadsworth said...

The coin could land on its edge, they'd still win.

Graeme said...

Ted Baker is looking dodgy too.... That's a lot of stock to go missing

Graeme said...

Historically, B, if an audit firm was involved in a big corporate failure it would break up or get taken over by another firm - Arthur Young and Ernst & Whinney in the 80s,Touche Ross and Deloittes in the 90s, Arthur Andersen after Enron in the 2000s. There were meaningful reputations at stake back then and large liabilities to pay. Now there are too few firms around for that to happen

Mark Wadsworth said...

G, agreed. You should do a guest post on all this to expose the massive scam that it all is.