PricewaterhouseCoopers has been accused of signing off on erroneous financial statements of MicroStrategy Inc., a PwC audit client as well as supplier of software products that PwC sells to some of its other clients. The issue raises the auditor independence red flag at a time when all accounting firms are under scrutiny by the SEC for independence transgressions.
While accounting firms maintain that they can provide unbiased services to their clients, even while working as consultants and resellers for the clients and their products, there is widespread belief that auditor independence is being sacrificed when the relationships between auditor and client get too cozy.
There was a time when accounting firms provided accounting services, and that was all. As the desire to generate more revenue coupled with the desire to provide a greater array of professional services to their clients grew, accounting firms became less dependent on accounting as a source of revenue and more entrenched in general business consulting issues. Now, many large accounting firms are rethinking this mix and are taking measures to separate their consulting practices from their accounting practices by spinning off the consulting part of their business into a separate company.
Is it possible that the future will bring a return to accounting firms that provide nothing but accounting services?
See related story about SEC offering amnesty to independence violators.