Deloitte Head Predicts Single Global Partnership Structure for Big 4
William Parrett, chief executive of Deloitte Touche Tohmatsu, the firm’s global umbrella organization, said that he expected “both from a business standpoint and a regulatory standpoint, [that the] larger firms will evolve to a global partnership over the next decade,” The Australian reports. The existing structures consist of networks of member partnerships established in the countries in which they operate.
Mr. Parrett said that although it would constitute a huge change, regulators were likely to push accounting firms to become single global partnerships. Before the global partnership structure could be adopted, however, liability policies in certain countries would need to be overhauled, he added, according to The Australian.
Regulators are increasingly questioning whether the “federation-style” associations of member firms can deliver consistent audit work, the Financial Times reports. And global consolidation could contribute to higher standards for audits, worldwide. Deloitte is preparing for scenarios involving regulators forcing structural change, Parrett said, according to Forbes.com
Deloitte published its strategy for the decade on Wednesday. While the plan says that the interests of Deloitte’s member firms are best served by the existing structure, Parrett commented that the structure should not impede efforts to improve the quality of the firm’s services, the Financial Times reports. “One could argue it is harder to do it in this structure, and therefore more costly.”
And in a move that could be leading the way to a single global partnership, the Strategy said that its 80-member partnerships may be reduced over the coming decade through consolidation, the Financial Times reported separately, although the firm would continue to represent clients in 150 countries.
Deloitte & Touche SpA, Deloitte’s Italian member firm, has been under scrutiny by regulators for their audits of Parmalat in the years before the company’s collapse. Two Deloitte & Touche SpA partners who signed off on the financial statements of the company have been banned from conducting audits for two years by the Italian stock market regulator, Consob, Forbes.com says. The two-year ban is the most severe the Consob can issue. Deloitte & Touche SpA said that one partner has retired and the other is no longer involved in audits.
Michael Rake, global chairman of KPMG, made a similar prediction last year, saying that the large firms could make such structural changes in the next ten years, the Financial Times report said.