Marketplace Starts Reacting to Deloitte’s Consulting Decision
Deloitte’s decision last week not to separate its consulting arm is beginning to show its affects in the marketplace.
Because of perceived independence issues, General Motors Corporation has announced that it will pull all of its consulting work from Deloitte, a move that amounts to a loss to the accounting firm of about $80 million worth of work.
Last week, Clorox and Auto Nation – who are both audit and consulting clients of Deloitte - announced that they would begin shopping for a new auditor.
Despite all of the recent scrutiny on the perceptions of independence and the moves by all of the other big accounting firms to split the audit from the consulting business, last week, to many people’s surprise, Deloitte Touche Tohmatsu scrapped its plans to separate its audit and consulting business.
"We are in the process of absorbing change; and change is a challenge," James Quigley, who becomes Deloitte's U.S. chief executive in June, told the Wall Street Journal. "I suspect a handful of clients will terminate either the audit relationship or terminate planned consulting projects."
Deloitte is also dealing with a growing focus on its role in alleged accounting irregularities at Dutch food company Ahold.
Recognizing the challenges ahead of it, Deloitte’s Board is expected to meet this week to discuss the best alternatives for moving the Big Four firm forward.
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