Figures obtained by Accountancy Age show that, in the first three quarters of 2004, Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers between them resigned 157 audits in the US, representing a three-fold increase from the same period three years ago – just before Enron.
The dramatic increase in the figures, supplied by US research house auditanalytics.com, has been attributed to the huge burden that the Sarbanes-Oxley Act has placed on auditors. The increased workload has seen auditors reallocate their limited resources. As a result many clients are no longer seen as attractive.
A spokesman for Ernst & Young, which saw its resignation figures jump from 14 in the first three quarters of 2001 to 68 this year, admitted it had resigned audits due to risk factors and limited resources. He added that the firm was ‘aggressively seeking to increase resources to meet the increasing needs of our clients by actively recruiting more people’.
Peter Wyman, PwC’s head of professional affairs, said that, as well as those businesses affected by Sarbanes-Oxley, the extra work required from the introduction of IFRS and the operational and financial review meant a similar situation could arise in the UK.
‘It all ties back into risk,’ he said. ‘You’re not going to sign off an audit unless you’re confident the work has been done and is correct. You’re not going to do half an audit because you have half the people.’
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