Key facts
- One of the Big Four accounting firms has raised concerns about BDO's audit quality.
- BDO USA audited First Brands between 2020 and 2024.
- First Brands' reported debt of $5.23 billion in 2024 was found to be $11.63 billion by restructuring advisers.
- First Brands founders were charged with fraud, including inflating invoices and hiding liabilities.
- A court examiner described BDO's audit process as "unsophisticated" and easy to "work around".
- BDO claims it was "deceived" and followed professional standards.
One of the Big Four accounting firms has raised concerns regarding the audit quality of its auditor, BDO, according to City AM. This development comes amid allegations that BDO has been selected by some companies specifically for its perceived less rigorous auditing standards, a practice that may have contributed to the collapse of US auto parts giant First Brands.
First Brands filed for bankruptcy in September 2025, with its founders, Patrick James and Edward, subsequently charged with fraud by federal prosecutors. Allegations include inflating invoices, reusing assets to raise debt, hiding liabilities, and potentially maintaining two sets of accounting books. A court-appointed examiner concluded that the company was sustained by fake financing.
BDO USA audited First Brands from 2020 to 2024. Their 2024 audit reported $5.23 billion in corporate debt, a figure that restructuring advisers later revised to $11.63 billion, more than double the initial amount. The audit reportedly failed to clearly show billions in off-balance-sheet debt, asset-backed credit lines, and certain supply-chain financing structures.
According to the Financial Times, a former First Brands employee told the court that BDO USA was deliberately chosen because it was considered the easiest firm to work around, with the court examiner's report characterizing BDO as having "the most unsophisticated audit process," implying "we can do what we want with these guys." BDO has responded by stating they were "deceived" and followed professional standards. However, creditors like Black Diamond are now suing BDO for negligence.