Deloitte to split accounting, consulting units; last of `big five' to make post-Enron move
Wednesday, February 6th 2002, 12:00 am
By: News On 6
NEW YORK (AP) _ The accounting firm Deloitte Touche Tohmatsu will separate its accounting and consulting divisions, becoming the last of the field's big five to make changes in the wake of the Enron scandal.
Deloitte had remained on the fence over the past week as the other four top accounting firms _ PricewaterhouseCoopers, Arthur Andersen LLP, KPMG and Ernst & Young _ announced changes in their business practices. The moves are aimed at quelling deepening concerns over the reliability of corporate financial statements following the collapse of energy trader Enron Corp.
James E. Copeland Jr., chief executive of Deloitte Touche Tohmatsu, said in an interview Tuesday that the firm made the decision ``very, very reluctantly'' and viewed it as a step backward in many ways.
But Copeland said the firm's leaders felt they had no choice in the matter since there was so much pressure mounting on the firm and its clients to separate the auditing and consulting businesses.
``Our concern is that our clients are being put in a difficult position of having to choose between their auditor of choice and their consultant of choice,'' he said.
Deloitte Touche Tohmatsu does business in the United States as Deloitte & Touche.
Critics say that allowing accounting firms to provide lucrative consulting services to the companies whose books they audit can compromise the independence of the auditor.
Like some others in the industry, Copeland said he did not agree with that argument but felt that the firm needed to address the issue in order to move on to more substantive reforms in the ways that companies report their financial statements.
Copeland said he hoped a detailed plan for the separation of Deloitte Consulting from the rest of Deloitte Touche Tohmatsu would be worked out by May.
Last week the largest accounting firm, PricewaterhouseCoopers, said it had accelerated plans to spin off its own consulting unit, PwC Consulting, because of investor concerns over Enron.
Enron's own auditor, Arthur Andersen, has been badly tarnished in the scandal following revelations that it destroyed documents that investigators were looking for.
On Sunday, Andersen said it had appointed Paul Volcker, a widely respected figure in American finance and a former chairman of the Federal Reserve Board, to lead an oversight committee that would make major changes in the way the firm does business.