Sarbox cuts Big Four advisory fees

Sarbox cuts Big Four advisory fees

Advisory fees for the Big Four have fallen by almost 30% since the introduction of the Sarbanes-Oxley act, new research has found.

Bold: Sarbanes-Oxley forces company to re-hire FD

The dramatic decline in non-audit fees was recorded by BDO Stoy Hayward. Their research found that between 2001 and 2002 there was a marked fall in the volume of work referred to the Big Four from UK companies with a dual listing in the US.

These firms, about 150 in total, are the most affected by the introduction of the act.

Sarbanes-Oxley came into force in July 2002 was introduced in the wake of the Enron scandal by the US government.

It was an attempt by the Bush administration to clamp down on Stateside corporate wrong-doing but also impacted on overseas firms with a secondary listing on Wall Street.

PricewaterhouseCoopers saw their fees drop from £328m to £197m – a drop of £131million or 40%.

Deloitte and Touche saw their fees drop from £62million to £48, a 22% drop, while Ernst and Young fell from £62m to £50m (19%).

Only KPMG bucked the trend with non-audit fees jumping from £89million to £99million, a 12% jump.

Gervase MacGregor, the partner who carried out the research, said the decline was significant even in then light of economic conditions and the selling off of non-audit arms by companies such as PwC and KPMG.

‘A drop of 27%, or £147m in consultancy projects is very large and out of proportion to the generally flat economic conditions facing accountants over the past couple of years,’ he said.

During the same period audit fees only increased by three per cent.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource