A Deloitte audit was also zeroed in on which failed to identify errors in a client's assessment of its goodwill impairment and effectively managed to "overstate the available headroom by a significant amount".  A slew of accountancy irregularities have come to light this year including at property services company Conaught, doorstop lender Cattles and building industries business Rok.  The Big Four have also faced a barrage of criticism for their dominance of the audit industry. Their extensive consultancy work with audit clients has been seen as creating potential conflicts of interest and now represents 75pc of overall revenue. Although they escaped a harsher clampdown after last year's Treasury Select Committee hearing, they were barred from providing restructuring work to audit clients and now face an investigation by the European Commission.  The FRC's report said the number of audits requiring "significant improvement" remained far too high: "Firms need to embrace more fully the principles underlying the Ethical Standards and, in particular, accept that non-audit services should not be provided to audit clients where appropriate safeguards do not exist," the report said.  E&Y, which had 236 audit clients in February 2009, was criticised for a salesman-like culture. Partners were singled for taking 'inappropriate credit' for cross selling non-audit services and the firm was rapped on the knuckles for taking on non-audit work without the level of paperwork needed to prove "safeguards had been properly considered."  According to the report a number of "partner candidate files" contained "inappropriate references of selling non-audit services to their audit clients." E&Y, which faced heavy criticism over its audit of collapsed bank Lehman Brothers, also failed to provide adequate evidence for the competence and objectivity of its external experts and were told they would be re-assessed for specifying targets for off shoring audit work to India.  The individual report on PwC found that, in one case, PwC was not merely the auditor but also the actuary to the group's pension scheme. "These arrangements were not consistent with the underlying principles of the Ethical Standards, due to the independent actuary's reliance on PwC's valuation leading to an unacceptable level of self-review threat," the report said.  Deloitte was pulled up over various issues regarding impairment testing, as well as the firms proclivity to second executives, including placing two Deloitte personnel at a company. The report said this could threaten the firms ability to take an objective view in audit.  In the case of KPMG the watchdog said "more emphasis needed to be placed on direct confirmation of the existence and accuracy of assets and of third parties,". It also called attention to the review process of the firm in regards to stock takes for companies with multiple retail outlets. . In terms of ethical standards the FRC found in three cases KPMG partners had been involved in the audit for more than seven years – a length of time that could threaten objectivity and independence.
The Big Four accountancy firms have been slammed for failures in the quality    and independence of their audit work by a City watchdog.