Exclusive – Big Five launches SEC fightback.

There were signs of a growing fightback by the Big Five against pressure to separate their audit and consultancy businesses this week as PricewaterhouseCoopers signalled it might stop short of splitting the two services in all parts of the world. At the same time Deloitte & Touche global CEO Jim Copeland told Accountancy Age the firm would only reverse its decision to maintain an integrated firm if it was placed under extreme pressure by regulators. Last week Arthur Andersen defied the US Securities and Exchange Commission by saying it would hold on to its consultancy practice. Ernst & Young and KPMG have already bowed to SEC auditor independence rules by announcing plans to dispose of all or part of their consulting arms. PwC may continue to offer an integrated audit and consultancy service in emerging markets including Eastern Europe, Latin America and Africa even after splitting the services in the rest of the world. The option is being canvassed with clients as the firm embarks on a massive consultation exercise to ensure the separation, announced last month, causes minimum disruption to clients’ businesses. Senior partners have emphasised that last month’s announcement was ‘the start, not the end of the journey’. They say the implementation of the break-up will be strongly influenced by local business conditions and there are so few SEC registered companies in some parts of the world that separation of audit and consultancy may not be necessary. Deloittes’ Copeland said ‘to divest the intellectual capital’ of a highly integrated firm by splitting it up would be ‘the wrong way to go.’ If regulators forced a split it would be ‘a real shame’ and would ‘lead to the diminishing quality of audit reports over time’. He added: ‘It would not, in my judgement, solve any of the public policy issues that the SEC is concerned with.’ Copeland also defended the motives of the SEC. ‘It is not a matter that these people are some kind of force for evil. They are trying to do the right thing. There is just a legitimate debate about what the right thing is.’

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