SEC faces legal threat.

KPMG has become the latest Big Five firm to publicly declare its opposition to the US Securities and Exchange Commission proposals for new rules on auditor independence, and join with Deloitte & Touche in saying that legal action remains a possibility.

KPMG this week said it would ‘seek to put pressure on the SEC’ by lobbying with the UK government and the European Commission.

Neil Lerner, practice protection partner at the Big Five firm, said legal action had not been ruled out. ‘If the SEC does not listen we have to consider our options,’ he said.

KPMG’s is the latest voice to join the clamour of opposition to the SEC proposals, which put forward rules intended to ensure auditor independence.

Lerner insisted there was no evidence independence is compromised by firms carrying out non audit activities.

Deloitte’s UK senior partner John Connolly has also made it clear resistance will be mounted against the SEC with sources at the firm saying legal action would be considered.

The key issues the profession has with the SEC is that it acted too hastily in introducing the new rules and that it has not left not nearly enough time – 75 days – for proper consultation to be carried out.

Lerner also objected to the SEC’s rule-based approach and would prefer the International Federation of Accountants’ framework solution, which would set general principles.

He said: ‘The services are continually changing and as soon as one set of rules is published they go out of date.’

PwC is in the process of splitting its consulting and auditing businesses, while Ernst & Young has already sold its consulting arm to the French group Cap Gemini.

Ex-KPMG chief blasts SEC Practice/1104581.

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