Comment - Peter, Ian, Colin and Nick

So Coopers and Lybrand and Price Waterhouse are to merge and now KPMG and Ernst and Young are proposing to do the same. So what?

The rationale for the corporate alliances is partly that investment costs in dealing with global enterprises will rise sooner rather than later.

But perhaps the reason has more to do with ambition and earnings than with potential investment costs.

The issue of Big Six M&As has been lively for a long time and is a natural development. There will eventually be a fall-out of partners in large firms – which should leave more profit for those remaining. There may also be staff losses and the possibility of greater opportunities for those who remain.

Ultimately, it is the clients who will determine the fate of the merging firms and also of those on the periphery. In this case, the only people who will be concerned are the chairmen, chief executives and finance directors of listed and some larger private companies who may consider it necessary to employ a Big Six accounting firm as company auditor. There will inevitably be a fall-out of clients from the newly mega-merged firms, which could benefit the remaining former Big Six firms.

The effect on the profession will be varied. It will have no adverse impact at all on medium-sized and smaller firms other than to benefit them.

Second division-sized firms might benefit – but likely only in the short term, if at all.

There are wider issues that need to be considered. The Big Six firms must wake up to the fact that their partnership structures are an anachronism in the modern world. Perhaps they should therefore be planning to implement the consolidation of all their non-audit work into their consultancy division.

This could be floated on the Stock Exchange to realise capital and to give the partners, in addition, stock to convert into cash at a future date. This would enable the firms to provide their services on a global basis.

The profession itself now needs to closely examine its role in relation to its members and third parties. To do so might, of course, necessitate a change of thinking.

The issue of independence and integrity is constantly under the spotlight.

Sooner or later, governments around the world will surely insist that firms acting as auditors to quoted and large private companies will not be allowed to conduct consultancy work for those same clients.

The profession would do itself a favour if it had the courage to advocate such a change before others press for action. If this particular point were the only one to come out of these proposed mega-mergers then at least something for everyone would have been achieved.