KPMG has attacked the Securities & Exchange Commission's rulings for auditor independence as "irrelevant and based entirely on misperception" on the eve of a public hearing looking into the proposals.
The SEC is due to hear evidence from leading figures from the profession, including representatives of KPMG, Arthur Anderesen and Deloitte & Touche, in a marathon event scheduled for this Wednesday in Washington DC.
Neil Lerner, head of European Risk Management at KPMG UK, said that the SEC's actions would be disastrous for the major firms supplying accountancy and consultancy services, as the proposals would prohibit firms from providing a range of services to audit clients.
Lerner said: "The SEC has taken, quite unreasonably, the view that somehow the provision of these services compromises the independence of the auditor. The SEC even admits that it has no evidence to support its hypothesis but claims that what is important is the 'perception' of lack of auditor independence."
He added that recruitment could be hit as young professionals have to choose between audit or non-audit firms, audit costs could increase, and this could lead to a decline in audit quality.