Big Accountancy Firms

Date : 01 July 2004

To : The Editor, Accountancy Age

From : Nagindas Khajuria

Subject : Big Accountancy Firms

BIG ACCOUNTANCY FIRMS

Your lead article and comment on the big four going back into consultancy by 2005 (17 June, page 1 and 12) runs counter to the fundamental reasons why they were asked to hive it off.

Their income broadly comes from four areas, consultancy and business advice, human resources advice, taxation compliance and planning and audit assurance, probably in equal revenue streams.

Hiving off IT consultancy is a red herring. Most large companies are so deeply computerized that business advice cannot be separated from IT.

The big four have wasted too many years encouraging financial engineering and short-termism, rather than reporting on the long-term strengths of company. 

They cannot give business advice, help with management selection, set up computer systems, give tax-planning advice, then help with account production and tax returns and finally certify that the business is run well, paying the right amount of tax and give a true and fair view of its annual results.

I hope the securities and exchange commission and or the EU's new constitution will make sure they are never allowed to wear more than two hats-ideally, auditing and taxation or preferably one hat only-auditing.