Deloitte Touche Tohmatsu has become the latest accounting firm to
separate its core financial auditing services from its consulting
services.
The company said it made the decision to separate Deloitte
Consulting "reluctantly". The company remains convinced that, in
its case, the conflict of interest concerns are purely a matter of
perception. It said it would never compromise its audit services in
order to protect its consulting contracts.
"I believe that, for our firm at least, the independence issue
related to providing both auditing and consulting services is one
of perception only," the company's chief executive, James Copeland
Jr said.
In the aftermath of the Enron bankruptcy questions are being raised
over whether it is appropriate for an accounting firm to sell
so-called "non-audit" services to clients it audits.
In the Enron case Arthur Andersen had the dual role of auditor and
consultant. The concern is that the accounting firm would choose to
be less strict and stringent during the auditing process to avoid
upsetting the client and losing non-audit consulting contracts.
These non-audit services include IT services, such as IT consulting
and systems integration, which have become a big source of revenue
for accounting firms in recent years.
This concern over conflict of interests became a hot issue during
the Enron debacle - questions about sub-standard accounting and
auditing on the part of Arthur Andersen have been raised. Arthur
Andersen also provided non-audit consulting services to
Enron.
Andersen issued a statement, saying it will "no longer accept
assignments from publicly traded US audit clients for the design
and implementation of financial information systems". An Andersen
spokeswoman could not clarify whether this means that Andersen
would stop providing IT services altogether or whether it would
continue to provide IT services to some clients and not others,
depending on each case.
Last week, PricewaterhouseCoopers issued a statement announcing its
plans to separate its IT consulting and services division, PwC
Consulting, via an initial public offering (IPO). The company plans
to file an IPO registration statement in the second quarter of this
year.
Ernst & Young sold its IT consulting services unit to Cap
Gemini in 2000. The other Big Five accounting firm, KPMG, spun off
its consulting business into an independent company called KPMG
Consulting.