The SEC today announced plans to curb the accounting profession's participation in various consulting efforts. Concerned that accountants are compromising their ability to perform independent audits, the SEC is trying to force accounting firms to discontinue certain consulting activities or, as some firms have already begun doing, separate the activities completely from their audit practice.
Auditing, once the bread and butter of accountants, has dropped from 70 percent to 30 percent of accounting firm revenues, according to an SEC spokesperson. This does not reflect a reduction in auditing services provided, but an increase in consulting services provided by the firms.
Representatives from the Big Five, who held an anonymous press conference yesterday while girding for today's announcement, claim the new SEC rule is unwarranted and assert that there is no justification for imposing such a restriction.
The proposal, which will be posted on the SEC web site as soon as it is finalized, will be subjected to a 75-day comment period which will include public hearings.