The big four accountancy groups underestimated the risks facing housing corporations in the period prior to 2010 and did not carry out proper checks on their finances, the financial services watchdog AFM says in Wednesday’s Financieele Dagblad.
In particular, Deloitte, Ernst & Young, KPMG and PwC failed to take account of the changing risk profile attached to housing corporations caused by the economic crisis, housing market slowdown and falling interest rates, the report says.
The AFM looked into the performance of accountants following the Vestia scandal – the Rotterdam housing corporation which got into acute financial difficulties after investing in complicated derivatives.
The watchdog identified a list of shortcomings in the accountants’ performance. For example, they had not used specialists to look at investment practices. There was also too little information in the annual reports.
Nevertheless, the accountants’ firms have now improved their operations in the wake of the Vestia affair, the FD quoted the AFM as saying. The big four cover 90% of the Netherlands housing corporation properties.
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