A senior London-based PricewaterhouseCoopers' partner has been forced by the US Securities and Exchange Commission to quit his job in a move which has called into question the ability of the UK profession to control its own affairs.
Geoff Westmore, PwC’s global head of transaction services, was told he must resign after PwC’s internal compliance process found he was in breach of SEC audit independence rules as his brother-in-law is financial controller of Reuters, an SEC-registered company audited by PwC.
He was told he must move both his place of work and his home at least 500 miles from any of the firm’s offices where a material part of the Reuters’ audit was carried out, making his job untenable.
Westmore is the first British victim of the SEC’s crackdown on Big Five firms which offer consultancy and audit services to the same clients.
But the fact that it has reached beyond its US remit to drive a senior UK partner from his job has provoked widespread concern.
Coupled with recent SEC pronouncements advocating the adoption of US accounting rules as the model for new global standards, the move has fuelled speculation that the SEC is seeking to overrule other nations’ accounting regulators.
A PwC spokesman said that the firm had applied SEC rules and denied that the situation would affect other partners. But a European accountancy regulator said the move was ‘just the tip of the iceberg.
‘The SEC is clearly doing battle against accountancy firms and until there is total separation between audit and consultancy, it will continue. The SEC is on a crusade,’ he said.
According to SEC rules, any employee of an accountancy firm with managerial responsibility whose dependents or relatives have a direct impact on a client audit can be in breach independence rules.
With more UK companies seeking listings on the New York stock exchange, PwC said: ‘We recognise that an increasing number of UK companies want to become SEC registrants and we have to make sure that we comply with the rules.’
An AccountancyAge.com special news focus exploring this issue will appear on the home page later today.