PracticeAuditBig Five back calls for accounting reforms

Big Five back calls for accounting reforms

KPMG and PricewaterhouseCoopers bit the bullet yesterday and said placing restrictions on services provided by audit firms should open the way for larger accounting reforms. Deloitte & Touche offered more cautious support for change.

KPMG, which fought the same restrictions in 2000, explained its sudden desire to prohibit auditors from providing non-audit services.

Stephen Butler, KPMG’s global chairman called the ‘perceived conflict between audit and non-audit service’ a ‘red herring’ that was ‘making it difficult to move on to the larger issues of modernising the financial reporting system’.

‘Specifically, we can no longer ignore the intangible assets of knowledge-based companies or be satisfied with a leisurely, quarterly, after-the-fact reporting cycle. Even a perfect audit of less-than-relevant and out-of-date information will not do investors much good,’ he added.

PwC spokesperson David Nestor, also spoke of the ‘crisis in confidence in accountancy and the perception of conflict’ as reasons for PwC’s support for reform.

He insisted that PwC’s plan to float its consultancy business, announced yesterday, was based on a business logic outlined two years ago. ‘We think the time is right,’ he added.

Ernst & Young said it would support such measures, while in the New York Times under-fire Andersen said it would no longer provide certain technology consulting services to clients it audits.

But Deloittes said: ‘For our firm at least. The issue with respect to scope of services is principally one of perception. It is a huge perception problem. But it is premature to accept or reject any single proposal, whether we agree with it or not, because the effectiveness of a complete set of reforms is what ultimately needs to be assessed.’

Earlier yesterday New York State comptroller Carl McCall had demanded new SEC regulations to include audit service restrictions, a seven-year limit on audit relationships and a two-year restriction on client employment of audit staff.

Next week senators Chris Dodd and Jon Corzine plan to propose a law restricting services provided by audit firms.

Related Articles

PwC replaces EY as Domino's auditor

Audit PwC replaces EY as Domino's auditor

5d Alia Shoaib, Reporter
The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

Audit The ‘uncomfortable truth’ behind FRC’s Big Four fines recommendations

2w Carl Johnson, Stephensons
BDO holds off Big Four to retain top position as AIM auditor

Audit BDO holds off Big Four to retain top position as AIM auditor

2w Alia Shoaib, Reporter
FRC urged to fine Big Four firms penalties over £10m

Audit FRC urged to fine Big Four firms penalties over £10m

3w Alia Shoaib, Reporter
EY to audit Standard Chartered bank

Audit EY to audit Standard Chartered bank

1m Alia Shoaib, Reporter
KPMG replaces PwC as Croda auditor

Accounting Firms KPMG replaces PwC as Croda auditor

2m Emma Smith, Managing Editor
EY fined £1.8m over Tech Data audit

Accounting Standards EY fined £1.8m over Tech Data audit

2m Emma Smith, Managing Editor
Top 50+50: Firms post significant growth in new tax and audit rankings

Audit Top 50+50: Firms post significant growth in new tax and audit rankings

2m Emma Smith, Managing Editor