PricewaterhouseCoopers rounded on its Big Five rivals this week and boasted that after splitting its audit and consulting services into separate businesses it would be the only Big Five firm to offer a completely independent audit practice. Speaking just days after announcing the ground-breaking split of the firm’s audit and consulting arms, PwC chief executive James Schiro told clients: ‘This constitutes something unique to the Big Five – a completely independent global auditing firm.’ Schiro’s thinly-veiled side-swipe at the competition is designed to pacify clients who are keen to be reassured that the new structure will not affect their dealings with the firm. PwC will now comprise the assurance practice, tax and legal services and other business advisory services only. It is considering floating its consulting arm. The move is expected to herald a wave of similar rationalisations among other Big Five firms. KPMG, which announced the incorporation of its consultancy business last month, said this week that it expected to introduce a similar structure after it completes a review of its operations. Other firms will now be forced to examine their own structures. One senior regulator said: ‘The Securities and Exchange Commission is clearly doing battle against the accountancy firms and until there is total division between audit and consultancy, it will continue.’ The split comes as the SEC moves to widen its probe into compliance with audit independence rules. The SEC recently issued a damning report into PwC’s sharedealings in quoted audit clients. The SEC declined to comment on whether PwC’s new structure would satisfy its tough regulatory stance but other Big Five firms denied the changes would have any effect on their businesses. KPMG audit partner Ted Awty said PwC’s plans were sketchy. But he admitted: ‘We are likely to move to a position that they have already been working towards.’ David Whitmore, head of Arthur Andersen’s audit practice, said: ‘(Schiro’s) statement is not something we would agree with. We are continually looking at what appropriate action we should take with our business, but there is nothing to report at the moment.’ Analysis, page 6; leader, page 22.
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