Deloitte: undecided how to separate

In an interview with Accountancy Age Deloitte’s UK chief executive, John Connolly said the Big Five firm was considering a number of options including a separate private partnership, selling the business or a flotation on the Stock Exchange.

He told Accountancy Age: ‘We have not determined quite what route we will take.

‘We’ll probably spend three or four months now talking to partners in consulting and working out which is the best route to achieve it.

‘We’ll take whatever time it takes to get to the right answer.’

PricewaterhouseCoopers took more than a year to decide to float its consultancy after failing to sell it to Hewlett Packard in November of 2000.

Connolly admitted Deloitte’s decision was a reaction to the recent events in the US following the Enron disaster, and to business concerns of awarding non-audit contracts to audit clients.

He said the extensive media coverage of the Enron scandal has caused a shift in public perception and now many companies are reluctant to award management consultancy contracts, particularly big IT contracts, to the firm that performs their audit.

‘Our conclusion was that we were putting at risk a lot of business in our consultancy and this was the right action,’ he added.

But he also said the firm did think about a possible separation when the Securities Exchange Commission reviewed the scope of services offered by accountancy firms two years ago.

‘Clearly then we were resisting, as were all the big firms, any restriction in the scope of services that were offered to any big clients, but we did explore the options that would be available if we had to resort to this.’

He also said that Deloittes’ announcement not to perform both internal and external audit services for the same company really regarded the the US, since the firm had not been doing this in the UK.