Accounting for fee ban
As reported by The Times (Business) Britain’s top accounting firms are set to lose hundreds of millions of pounds in fees as the financial reporting watchdog considers tougher restrictions on the services they currently sell to listed companies whose accounts they are auditing.
The Auditing Practices Board (APB) which is a division of the Financial Reporting Council (FRC), has confirmed that it is to review its rules created to safeguard audits following growing concern that the big firms’ objectivity has been compromised under the existing system in place.
Among proposals, the financial reporting council is going to consider an outright ban on accounting firms providing non-audit services to audit clients – massively affecting the big four businesses; Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers – who use their audit relationships to sell additional services including tax planning and management consulting.
The article reports that the big four accounting firms generated around £530 million from fees by auditing Britain’s 100 biggest companies last year, whereby an additional £380 million was generated from ‘other’ services provided to those clients – It is also suggested that if the FRC makes just modest changes, accountants may still need to re-think their business model.
The Times (Business) 7 October 2009 (Tough new rules could hit big four services fees)