MP links Big Four secondees with liability law

Seconded accountants from the Big Four may have influenced the ‘protective
arrangements’ limiting the liabilities of top accountancy firms, according to a
senior Labour MP.

The allegation emerged after financial secretary to the Treasury John Healey
revealed that Deloitte, Ernst & Young, KPMG and
PricewaterhouseCoopers collected £859,000 between them last year in fees from
the Treasury itself, including £571,000 in ‘various secondments’.

Replying to a formal Commons question from Newcastle Central Labour MP Jim
Cousins, Healey said if the Office of Government Commerce was included the
figures rose to £1.5m and £731,000 respectively.

Cousins, a veteran of the Commons Treasury Committee, said he would table
further questions to other departments in an attempt to discover the extent of
government exposure to the largest firms ahead of consideration by the House of
Commons of the Company Law Reform Bill, currently being debated by a Lords

He said: ‘I am concerned about the increasing dependence of the government
for policy, planning and project management advice from the Big Four and the
costs involved. What is demonstrated here is the very broad range of their
involvement in such advice, extending interestingly to a very wide range of
secondments in government service.’

He said he was ‘also concerned about the policy implications of this
dependency, and about the crossover between the protective proposals in the
Company Law Reform Bill and the government’s dependence on the services of the
Big Four’.

He said he was worried ‘that the protective proposals for the mega-firms may
have been inspired by this dependence’.

Cousins, a longstanding critic of the accountancy profession, said that if
such wide use had to be made of outside advice, the Treasury should obtain it
from a wider range of sources, adding that he was ‘confident that many small and
middle-sized firms’ development would benefit from business as much as their
income from which they have been effectively excluded’.

He warned that interest is being taken in what had previously been considered
technical legislation because of the issues involved. He was concerned the
proposals to limit audit liability would entrench the position of the Big Four,
while he wanted to ensure other firms had the chance to grow.

Cousins’ action emerged as the Tories prepared to mount an effective
challenge in the Lords to sections of the bill imposing new duties on directors.

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