Big Four firm Deloitte Touche Tohmatsu has announced that plans to break off its Deloitte Consulting arm into an independent company have been tabled. "We began this process at a time of more robust consulting, capital and credit markets - all of which have deteriorated in the past 14 months, due to economic uncertainty exacerbated by the war in Iraq," said James E. Copeland, Jr., Deloitte CEO.
Spin-off plans for the consulting practice were announced in February, 2002, and last July the company unveiled its plan to rename the new consulting company Braxton.
KPMG, PricewaterhouseCoopers, Ernst & Young, and the now-defunct Arthur Andersen have all spun off their consultancies in recent years in response to pressure on members of the accounting profession to separate audit from consulting work. New Securities and Exchange Commission independence rules forbid audit firms from performing certain non-audit functions.
As a result of these SEC rules and the Sarbanes-Oxley Act of 2002, accounting firms have stopped performing much of the consulting work they did previously for their audit clients. Deloitte, which only reluctantly agreed to separate its consulting arm last year, has shifted its focus of consulting work to the 75% of the publicly held companies that it does not audit.
"I think we can rebuild our revenue base by focusing on non-audit clients," said Mr. Copeland. Deloitte "clearly is going to comply with the letter and spirit of the law," he added.