The SEC has come to an agreement with four of the Big Five just days ahead of today’s public hearing on the new rules on auditor independence.
The toned down rules will reduce the amount of consulting work that the firms can do for their audit clients. But, will by now way prohibit them from offering consulting services as previously expected several months ago, according to reports from the US.
PricewaterhouseCoopers, Ernst & Young, Arthur Andersen and Deloitte & Touche are expected to approve the rule within the next few days.
The crusade of SEC chairman Arthur turned out to be substantially less aggressive towards the Big Five than expected six months ago when he launched the inquiry into auditor independence.
Firms expected Levitt to force the largest of professional services firms to separate their consultancy and audit arms to ensure independence.
Big Five chiefs have always maintained that by selling off their consultancy firms they would no longer be able to compete with other industries.
The agreement means that there is little chance the new rule will be overturned either by the US Congress or a new regulator.
Levitt, who is the longest serving commissioner at the SEC, is expected to step down next year, two years earlier than his tenure ends.
Despite the about-turn Levitt is still perceived as winning a victory in some quarters in the US.
No chairman has attempted to update independence rules since the early 1980s, according to US papers.
Ernst & Young sold off its consulting arm to French firm Cap Gemini earlier this year in a deal worth around £7bn.
This week saw the collapse of a deal for Hewlett Packard to acquire the consultancy arm of PwC, which continues to look for a buyer.
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