COMMENT - SEC, consultancy and profit.

Don’t ask me how I got hold of the tape. Don’t ask me how I knew when the meeting was going to be held.

Just sit back and read the transcript of an executive meeting of a large firm of accountants and consultants. There are three partners: P1, P2 & P3.

P1: ‘In view of the Security and Exchange Commission’s objection to auditing firms also giving consultancy advice to their clients, we need to consider selling our consultancy business.’ P2: ‘It’s worth a lot isn’t it?’

P3: ‘Audit firms need to be above suspicion. This firm should be leading the way.’

P2: ‘And the consultancy practice is very valuable, isn’t it?’

P1: ‘Probably worth around #10bn.’

P2: ‘£10bn!’

P3: ‘Certainly we should be at the forefront when it comes to standards.’

P2: ‘£10bn! Shared among the partners?’

P1: ‘But I’m unhappy about a bunch of Americans interfering in the way we conduct business.’

P3: ‘I agree.’

P2: ‘But……..’

P1: (Interrupting) ‘Where will we get our new recruits? Will they want to join a business that only does auditing?’

P3: ‘That’s an important point.’

P2: ‘Who the hell cares. I’ll be on my yacht.’

P1: ‘Why does the SEC think we can’t be independent auditors and consultants?’

P3: ‘I don’t see any incompatibility. Doesn’t the SEC understand our ethical standards or appreciate the quality of our training?’

P1: ‘The SEC merely relies on a bunch of rules. Pretty arbitrary rules, if you ask me.’

P3: ‘And think how many lawyers the US has who can find their way around them.’

P2: ‘Is this relevant?’

P1: ‘We must fight this. Let’s ring round the other firms. I’m sure we’ll get their support.’

P2: ‘But the practice is worth £10bn for ****** sakes. Are you suggesting we don’t sell?’

P1/P3: ‘Of course we are going to sell.’

P2: ‘Then why are you proposing that we fight the SEC?’

P1: ‘So we’re free to build a new consultancy practice.’

P2: ‘And then sell that?’

P3: ‘Exactly.’