SEC Wary of Firms Moving into Consulting

The Securities and Exchange Commission’s (SEC) Chief Accountant, Paul Beswick is urging accounting firms to proceed with caution before trying to grow their business via non-audit related acquisitions.

“I continue to observe the accounting firms are actively growing their consultancy practices,” he said. “Such expansion runs the risk of damaging the accountant’s reputation.”

The SEC feels that these types of acquisitions could limit a firm’s independence. These comments were made after each of the Big Four firms purchased consulting firms. The acquisitions trend is a change. Following events like the Enron scandal, large audit firms were quick to stay clear of consulting.

Beswick said “The public considers audit firms to be gatekeepers, not consultants. You earn the public’s trust by improving audit quality. I’m hopeful that my comments today will encourage reflection when firms are faced with decisions about growth.”

Regulators will likely be looking into the issue in 2014. Likely topics to be addressed include audit quality and independence.

 

 

Posted on December 19, 2013 at 10:00 AM