Research by mid-tier firm BDO Stoy Hayward has claimed that Sarbanes-Oxley
cost the UK’s Big Four audit firms £318m in lost consultancy fees over the last
two years, as governance rules prohibiting auditors from performing consultancy
work spilled over from the US.
Gervase MacGregor, a partner at BDO Stoy Hayward, which has monitored the
impacts of Sarbox on 100 UK companies with US listings, said that from 2001 to
2003 non-audit work done by the Big Four for these companies ‘more than halved’
from £541m to £223m.
An insider at one of the Big Four firms, however, said the data used to
compile the figures was ‘distorted’ and did not compare ‘apples with apples’, as
some firms had sold off their consultancy functions, which would have caused the
decrease in non-audit income.
But MacGregor maintained that a definite trend had emerged, adding that
stricter rules governing non-audit work done by auditors could have further
implications for UK companies without US listings, when the EU eighth directive
becomes law later this year.
‘The eighth directive will look at how Sarbanes-Oxley requires companies to
account of themselves,’ MacGregor said. ‘It is difficult to predict, but we are
likely to see more regulation in Europe than less.’
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