EY may be taking steps to draw a broader line between audit and consulting services in the United Kingdom, but the U.S. firm has no such plans. PwC, meanwhile, has remained silent on the same subject.
Following reports that EY and PwC informed U.K. authorities they would stop offering consulting services to audit clients, EY in the United States says it remains committed to its current business model. “In a rapidly innovating and evolving global business environment, it is more important than ever that the full breadth and depth of audit firms’ subject-matter expertise, supported by the multi-disciplinary business model, continue to serve as a crucial foundation for delivering the highest quality audits,” the firm said in a statement.
EY in the United Kingdom confirmed it is taking steps to phase out non-essential audit services for its largest audit clients, or the top 350 companies in the Financial Times Stock Exchange. “We will work with our regulators to agree on the definition of such services,” the firm said. “We believe this will help to improve trust in the profession and the perception of conflicts of interest.”
Press reports suggested both EY and PwC informed U.K. authorities they would stop offering consulting services to audit clients. PwC, however, did not respond to numerous requests to confirm its intentions in the United Kingdom, nor whether it was considering any changes to its U.S. business.
KPMG earlier said it would stop providing consulting services to its U.K. audit clients, but KPMG in the United States is considering no such change. Deloitte has made no formal announcements, but a Deloitte spokesman pointed to the firm's submission to U.K. regulators that acknowledges public perceptions of conflicts and supports a ban on non-audit services being provided to FTSE 350 and larger private audit clients. “We have not yet moved forward with implementing these proposals,” the spokesman said. “We believe it will be important not to pre-empt the final outcome of the CMA work and the actions that will be required.”
Big Four firms in the United States have generally defended their business models as an important element in providing quality audit services.
“Audit quality is enhanced by a strong and vibrant financial reporting ecosystem encompassing issuers/companies, regulators, stewards of governance and the audit profession,” EY in the United States said in its statement. “This ecosystem has been highly effective in supporting the delivery of independent, objective high quality services for the benefit all stakeholders. We remain committed to providing permitted non-audit services under the purview of independent audit committees and consistent with the Sarbanes-Oxley Act.”