Conflicts of interest – PwC earns double for non-audit work.

PricewaterhouseCoopers is earning twice as much doing consultancy and other work for its audit clients than for actually carrying out audits for them, the highest proportion of any Big Five firm. The survey of FTSE-350 companies has revived the conflict of interest debate among the Big Five. Firms have come under pressure in recent months to separate their audit and consultancy arms amid fears that fees earned from non-audit work could undermine their objectivity in acting as auditor to the same company. The survey, thought to be the first of its kind, examined the published accounts of the leading companies and compared non-audit to audit costs. The scale of non-audit fees from audit clients prompted David Haigh, chief executive of Brand Finance, which carried out the survey, to claim there was ‘an inherent risk’ of conflict of interest and to call for a review of guidelines. The survey showed PwC enjoyed £224.4m in non-audit income from clients that paid £122.5m in audit fees. Deloitte & Touche made £23.7m from audit clients whose audit fees totalled £16.9m while the figures from KPMG were £123.1m and £87.5m. Arthur Andersen earned £24.3m and £19.6m respectively, and Ernst & Young made £61.7m and £47.1m. A spokesman from PwC said: ‘We do not think that by doing non-audit work we automatically impair that independence and objectivity.’ Ian Plaistowe, chairman of the APB, said: ‘If this was an issue we would get dozens of cases every year where this was an identified, major problem. But we don’t.’

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