Europe will deprive of the company of councils of auditors
“ to the Big four “ want to forbid to be engaged in consulting
Eurocommission plans to change the legislation in the field of regulation of activity of auditor firms. Changes can deprive of a considerable part of profit “ the big four “ the auditor companies into which enter Deloitte, PricewaterhouseCoopers, Ernst and Young and KPMG. To them can forbid rendering of all consulting services and oblige them closely co-operate with small representatives of sector.
the European regulators intend to restore trust of investors to the auditor checks, lost as a result turns of bankruptcies of the large companies during crisis. According to Financial Times, in Eurocommission have already prepared the package of measures directed on strengthening of a competition of the companies and elimination of the conflict of interests at simultaneous rendering to the client of auditor and consulting services. The given plan has found support among influential officials of EU in the name of the commissioner on Michel Barne`s home markets and will be already presented the wide public in November. For finding of the status of the law the Eurocommission offer should be approved EU Member States and EuroParliament.
It is supposed that the auditor companies wait three basic innovations. The interdiction for large players of sector on rendering of consulting services becomes most significant of them. Similar restriction on a root cuts operating business - model of the largest auditor companies. For example, for today representatives “ the big four “ receive in the British market only third of profit of rendering of the auditor services, all other sources of the income concern consulting sphere.
Besides, the Eurocommission intends to oblige the companies, whose balance exceeds 1 mlrd euro, to employ for check at once two auditor companies, and one of them by all means should not belong to “ to the big four “. Moreover, large European business cannot is more permanent use the same auditor - each nine years change checking will pass without fail. All it, are assured of Eurocommission, will help to make auditors more independent and to give to their work the big transparency.
the Largest representatives of sector already have found counterarguments on similar objections. So, in Deloitte have declared that new measures “ will lower quality of spent audit “ also will lead to growth of cost of rendered services as for appropriate execution of the duties checking it is necessary to understand thoroughly business of clients that just and the employees occupied in consulting help to do.
As independent experts consider, the initiative of Bruxelles nevertheless is capable to correct a situation with quality of auditor checks, however regulators do not need to perceive an interdiction for rendering of consulting services as panacea. “ between an interdiction for consulting services and improvement of quality of audit there is no direct communication. It is not necessary to rely in such degree on offered measures. Not less great value some more factors, as that here have: the relation of the auditor to carried out work and the culture of the companies encouraging ethic behaviour “ - has declared daily the teacher of accounting in LSE Andrea Menniken`s doctor. Experts also do not exclude that “ the big four “ will simply deduce consulting business in separate legal persons.