Connolly sparks Big Four clash over consultancy

Link: DTI investigates Big Four ‘monopoly’

Connolly singled out PricewaterhouseCoopers in particular as having an opaque consulting practice equal in size to his own firm’s.

‘You can’t see it clearly within the numbers that they publish, but it would not surprise me if it was a similar size to the one that we’ve got, or not far short of it,’ Connolly told Accountancy Age.

Deloitte was the only Big Four firm to resist immense pressure to separate its consulting arm in the post-Enron drive for auditor independence.

But Connolly insisted the other firms’ withdrawal was deceptive and claimed they would openly move back into the sector within two years.

‘We are far more transparent about the fact that we are in consulting, but as we compete with them all the time we know they are all in it,’ he said.

The comments provoked anger at Deloitte’s rivals, where one senior source even suggested their motivation was a last-ditch attempt by Deloitte to sell its consulting arm.

PwC dismissed Connolly’s comments as wordplay. Roger Hughes, managing partner, said: ‘I’m not quite sure what point he is trying to make … which bits you call consultancy rather than advisory is just semantics.’

Gavin Houlgate, head of corporate communications at KPMG, said: ‘We don’t need lessons in transparency from Deloitte.’

Both firms said they had sold their IT consulting arms, and denied plans to return to the sector. But PwC admitted some advisory work matched the definition of ‘consulting’ laid down by the Management Consultancies Association (MCA). Fiona Czerniawska, director of the MCA’s think tank, said that consulting was ‘the nature of the beast’ for the Big Four. ‘They’ve probably been doing some consulting all the way through,’ she said.

The two admitted they were beefing up in the grey area of advisory services. Ernst & Young stressed it ‘is not’ re-entering consulting.

DELOITTE IN FIGURES

£294M: Consulting Fees

£59M: Consulting Profit

£1.2bn: Overall Revenue

£374m: Overall Profit

24%: Consulting Revenue

16%: Consulting Profit

£2.9M: Connolly’s Pay.