Consulting clients set to ditch Deloitte.
Vodafone says it will not renew consulting contracts as Big Four firm has decided to retain its consulting arm. Deloitte & Touche admits others will follow.
Link: Deloitte to start review of structure
Deloitte & Touche conceded this week that it may lose more clients because of its decision not to separate its consulting arm from the main firm.
The concession follows the decision by Vodafone to stop using consulting services from Deloitte.
In the US, the firm has already lost General Motors and AutoWork as clients because of its decision in March not to separate consulting.
A spokesman for Deloitte said: ‘We are aware of the fact that some of our clients will have to change consultants, but we are more interested in the long-term relationship with our clients.’ He added that the firm was confident integrated services would ‘pick up elsewhere’ and insisted that client losses represented only a ‘small percentage’ of global business.
Vodafone told Accountancy Age it would continue to use Deloitte as auditors, but could no longer use its consultancy services because of US regulations and because Deloitte is no longer hiving off its consulting arm.
The news comes ahead of Vodafone’s agm on 30 July. A Vodafone spokesman said: ‘Because of Sarbanes-Oxley, it changes the additional services they can provide for us.’
The Sarbanes-Oxley Act states that certain types of consulting work have to be pre-approved by the audit committee, but Vodafone said that even if it were to use Deloitte for work not sanctioned by Sarbanes-Oxley it would still need pre-approval.
The mobile phone giant did not say how much money Deloitte stood to lose without the consulting fees, but added that ‘there is a huge amount of money to be invested’.
According to Vodafone’s most recent annual report, the Big Four firm received £15m in non-audit fees. Deloitte’s consulting work with the company included compliance, tax advice and a £10m IT consulting job. The firm was paid only £5m in audit fees from Vodafone.
The decision was made after the Sarbanes-Oxley Act was passed in the US in July. Deloitte revealed in March that it would not separate from its consulting arm after announcing that it would in February 2002.