Auditor-Tech Consultants Say Their Two Functions Add Up
Investor's Business Daily Online (08/10/00) Vol. 104, No. 32 p.14; Benjamin, Matthew

In recent years, the Big Five accounting firms have diversified their services and moved beyond auditing to include tech consulting, management, and corporate finance. The Securities and Exchange Commission (SEC) estimates that this shift has resulted in the diminution of auditing services among Big Five firms, shrinking profits in that area from 70 percent in 1977 to a scant 30 percent today. This diversification, says SEC Chairman Arthur Levitt, presents a conflict of interest for these firms, and he has proposed new rules to keep auditors independent from the companies they work for. Officials from Big Five firms, such as Arthur Andersen's Jeff Peck, say that their non-audit services augment their audit services and that the SEC rules would effectively hamstring their ability to conduct business. Peck acknowledges that objectivity and independence are the twin pillars of the accounting business, but he believes that the SEC's proposal has no evidential basis and should not be approved. Furthermore, Peck says that the new proposals are premature because other measures recently adopted to bring more transparency to auditor independence have not been given time to work. In fact, Peck believes that the SEC is trying to pass these dramatic changes now, before the political climate changes and the commission loses its window of opportunity. Moreover, Peck believes that if the SEC's proposals are implemented, audit quality will suffer and a fair number of professionals will leave the industry to pursue work that goes beyond traditional auditing. For auditors to remain competent, relevant, and independent, they must not be set to task with one arm tied behind their back.


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