City voices fee concerns.
Strong growth in non-audit services offered by Big Five firms is causing increasing concern among City analysts and listed companies about auditor independence , writes Michelle Perry. New research into auditor independence at the Big Five has revealed that non-audit services continue to race ahead. Non-audit work now represents 66.9% of total fees received by the firms, up from 61% last year. The research, by Brand Finance plc, is based on an examination of audit and non-audit fees paid to auditors by the FTSE-350 companies. Findings showed that 187 of the 292 City analysts surveyed believed non-audit fees would compromise independence. The research follows an attack on Big Five firms by Arthur Levitt, chairman of the Securities and Exchange Commission, the profession’s main watchdog in the US. Levitt has lambasted auditors for compromising integrity. David Haigh, chartered accountant and chief executive of Brand Finance plc, said: ‘Our study reveals the SEC’s concerns about auditor independence are shared by the majority of equity analysts. There is also significant concern with the concept of audit partners retaining an interest in divested consultancy businesses.’