Opinion: Issue of audit independence.
Only months after the first major UK consolidator was born, 'the Tenon model' is already a common phrase.
The firm – rather company – already has imitators, not least in Numerica, the Levy Gee offshoot hungrily eyeing its former competitors. Numerica has also announced its intention to spin off its audit arm into an arm’s length associate – again a la Tenon.
But this raises the same troubling concerns. Rules preventing listed companies acting as auditors exist to prevent shareholders exerting influence over auditor objectivity. Even if existing rules are not being breached, is it ethical for the arm of a listed company to carry out audits?
The ICAEW has already pledged to keep a close eye on the audit independence issues surrounding Tenon’s audit arm, Blueprint.
It will now need to do so at AV Audit, Numerica’s ‘Blueprint’ and wherever else a similar practice is employed. When it comes to audit independence perception matters more than reality. Accountancy does not need another SEC-style battle.