Deloitte spins off consulting arm
Deloitte & Touche today announced it is spinning off its consulting arm, officially heralding the end of the Big Five's marriage of non-audit and audit services.
The move, announced this afternoon (Wednesday) by John Connolly, Deloitte’s UK senior partner, comes after immense pressure was placed on accountancy firms and their efforts to ensure auditor independence following the collapse of Enron.
During the last US Securities and Exchange Commission review into auditor independence, Deloittes became notorious for vehemently arguing to keep its consultancy and accountancy arms together.
In the last months it has resisted and denied that it would separate the two arms.
Connolly said: ‘As a consequence of market perception we have concluded that the interests of clients and staff are best served through this separation.’
‘We strongly believe that the concerns about auditor independence arise more from perception than the evidence of business reality.
‘However, we have taken the decision because we, in the current environment, cannot allow our clients to be criticised because of the perception problem surrounding the scope of services audit firms may provide to clients’
Deloittes hopes that its separation from Deloitte Consulting will enable audit clients to use the consulting arm ‘without raising public concern about auditor independence’
The move will make Deloittes the last Big Five firm to divorce itself from its consulting arm. Last week, PricewaterhouseCoopers announced the flotation of their consulting arm. Ernst & Young sold its consultancy to Cap Gemini more than a year ago while KPMG floated its consultancy in February last year.