Friday 22 February 2013

Big 4 Accounts: Lobbying mission accomplished

Everyone hates banks or says they do; its the zeitgeist they have replaced estate agents as the recipients of loathing from the common and not so common man. The only lifeform lower is the politician, who makes great efforts to join in banker-bashing in the vain hope of bringing them down to their own lowly status.

However, far above the fray, lie the professionals, those lawyers and accountants. Well paid and respected, they have not only escaped most of the opprobrium from the Financial Crisis but remain with much of the pay and rations intact in a time when the wider City has been taking a haircut.

Moreover, there has long been justifiable criticism of the Big 4 accountants. Where were they when Lehmans was lying? Where were they when Northern Rock was juicing its balance sheet?

The reaction from the UK regulators and Europe was to talk about some very serious changes to the cosy world of audit appointments. There was talk of splitting non audit business, active rotation, appointment of non-Big 4 firms and reporting to shareholders rather than executives.

I know the Big 4 were scared as they have made some quite big structural changes to their businesses to prepare for this. But hooray for them, their hard lobbying has paid off. Today it is announced there are some concerns about their actions, but little meat. More frequent audit changes are a small price to pay and given that PWC audits 55% of the FTSE100 there is only one firm that can lost in a major way from more frequent rotation of auditors. Even the EU has given up on any grandiose ideas of reform.

So roll on accountants, keep your money and your cosy world - all is not lost for ye.

7 comments:

Bill Quango MP said...

We all love the big 4 in the House of Commons.
They actually write a lot of our policy documents and supply top notch accountants for free. To both government and opposition.

Butter the bread both sides. That way there's always a ready base for the jam tomorrow.

Blue Eyes said...

Exactly the same debate was had after Enron. A little bit changed. Accenture sold off their accountancy arm, Ernst & Young spun off their IT support wing, etc.

I think the solution is for big companies to publish their accounts and let the internet sort through them. Data mashing I think it's called.

measured said...

Three little words must have been redacted; conflicts of interest.

"Oh, but we have ethical committees and the ACCA and the ICAEW." Blinkers and b*ll.

Mark Wadsworth said...

BQ nails it.

We've heard this waffle about "strangehold of big 8", "stranglehold of big 6" and so on for decades.

"Compulsory audit rotation every five years" and "separation of audit and consultancy services" keep being mentioned but in the end nothing happens.

CityUnslicker said...

Exactly MW - that's how it goes. they seem to be a good lobbying job!

Graeme said...

mmm...so the Treasury keeps increasing the size of the tax code....who can possibly understnad the code without the help of people whose job it is to understand the tax code?

Whose side is the treasury on?

And then we have the Hodge-person mouthing off against the things from which she personally benefits. Where is the retch-pit when I need it?

Agence communication said...

this is true and i get it ..'' veryone hates banks or says they do; its the zeitgeist they have replaced estate agents as the recipients of loathing from the common and not so common man. The only lifeform lower is the politician, who makes great efforts to join in banker-bashing in the vain hope of bringing them down to their own lowly status.
''