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    This is in the very early stages and might not go anywhere - it would presumably need some quite heavy-handed government intervention that I'm not sure there's much of an appetite for, but is anybody worried? Will the Big 4 be taking a close look at their recruitment plans? If you have an offer already is that something you can rely on? I think I just need reassurance really!
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    (Original post by Newland)
    This is in the very early stages and might not go anywhere - it would presumably need some quite heavy-handed government intervention that I'm not sure there's much of an appetite for, but is anybody worried? Will the Big 4 be taking a close look at their recruitment plans? If you have an offer already is that something you can rely on? I think I just need reassurance really!
    There is no reason for this to affect recruitment. Indeed it would almost certainly increase overall headcount. Each client would end up with a relationship partner at its accountants and a relationship partner at its auditors. The accountants would have to justify to the auditors, the accounting policy approaches adopted. Part of the audit will be reviewing the figures the accountants put together to produce the accounts. At present audit departments basically nod through the work of their own organisation.

    What will happen is that the audit practices of the second and third tier firms will be competative for many audits with the big 4's audit practices.

    I think this change is likely to come in. There is a widespread feeling that audit is not serving the public interest or those of investors. The loss of AA as a result of Enron narrowed the market unacceptably.
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    My feeling on it is that the motivation for changes will have to come from politicians and therefore the public, who have a limited understanding of the audit Market. Most people I would imagine simply don't care - it's not quite as easy to vilify or get angry about as greedy banker culture. On the other hand I cannot imagine many businesses will be falling over themselves to support a measure that will force them to change auditors regularly, especially if they have a team round them who understand what they do. It would be expensive as well. Also I can't help but feel the unlikely failure of one of the Big 4 would be a lot less scarey than the failure of a large bank. That being the case, I am not sure where the political momentum would come from. The government has enough on its plate doing things voters actually want them to do without getting involved in messy legislation like this...
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    (Original post by Newland)
    My feeling on it is that the motivation for changes will have to come from politicians and therefore the public, who have a limited understanding of the audit Market. Most people I would imagine simply don't care - it's not quite as easy to vilify or get angry about as greedy banker culture. On the other hand I cannot imagine many businesses will be falling over themselves to support a measure that will force them to change auditors regularly, especially if they have a team round them who understand what they do. It would be expensive as well. Also I can't help but feel the unlikely failure of one of the Big 4 would be a lot less scarey than the failure of a large bank. That being the case, I am not sure where the political momentum would come from. The government has enough on its plate doing things voters actually want them to do without getting involved in messy legislation like this...
    I take your point but an awful lot of EU regulatory change comes in areas of little public awareness. If the Commission proposes a change then member states have to use political capital in opposing the change or it goes through on the nod.

    Clearly the big 4 accountants will lobby against change, but their professional bodies, dominated by smaller firms, may well be in favour. Will the big corporate representative bodies e.g. CBI, IOD oppose change? I suspect quite a few finance directors wouldn't mind it that much.
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    With this proposal would the Big 4 companies have to choose between practising as an Audit firm or a non-audit firm, or could they operate as both but under 2 companies?
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    My half-educated guess is yes, Sweety_pie. one of the points of the proposal is to bar audit firms practising any other services than audit (this includes Tax services as well I presume). They mention "conflict of interest" a lot, and I guess even if they split into two companies (but effectively a part of the same group, ie the final balance sheet would include both companies), the conflict of interest would not be eliminated... the rationale behind it being that as long as both PwC Audit and PwC Consulting ( made up names) show up under the same balance sheet of say PwC Group, there will be a danger of conflict of interest.

    My question is, under the Sarbanes Oxley act, how do the Big4 still manage to get away with providing consultancy services to their audited companies? I found in an FT article that Deloitte actually managed to rake up 200m in consultancy (and tax) fees to their AUDIT clients (non-audit revenue was much larger, but still...). It also mentions that "SOX led to the 3 of the Big4 selling their consulting divisions, before quietly building them up again". How? I am quite keen on knowing the details of this, for the sake of interest (and maybe prospective topic to talk about at an interview. I imagine though this would be a dangerous ground to enter when being interviewed at Big4)
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    I really can't see many of the changes suggested being implemented they are trying to over simply a complex global problem. Putting a ban on non audit services has already been done in some countries outside the eu with little success and it can be argued they are in a no better situation that they were before. The proposed idea of joint audits so smaller firms gain experience whilst in theory is a good idea in practicality it doesn't work look at what happend at Parmalat.

    The only change I can forseeingly being made is a mandatory rotation of the auditors being introduced and the length of time an engagement partner staying with a client being reduced. Even these changes will take so long to go through it's unlikely the big 4 will have to change any of their recruitment strategies any time soon

    Most ideas are very unlikely to be pushed through because of globalisation and the complexity of the situation.
 
 
 
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