Disney May Set Precedent for Auditor Independence
In a decision that may set a precedent for the public accounting profession, the Securities and Exchange Commission has ordered Walt Disney Company to go forward with a shareholder vote on whether the company's outside auditor may perform consulting work for Disney.
Last year, Disney's outside auditing firm, PricewaterhouseCoopers, performed consulting services in the areas of tax, accounting, information services, and business process matters. Although the SEC now requires that companies disclose on their financial statements the amount paid to auditors for non-audit services, the rule requiring that disclosure became effective after Disney's prior year financial statements were filed, so no such disclosure was made on Disney's statements.
In a written opinion, the SEC denied Disney's objection to the vote, "in view of the widespread public debate concerning the impact of non-audit services on auditor independence and the increasing recognition that this issue raises significant policy issues."
Speaking about auditor independence, Joyce Mader, an attorney who helped work on the Disney shareholder proposal said, "Given Enron, I think there are a lot of questions out there. It appears that is precisely what the SEC has said."