Sarbanes-Oxley Leads to Another Firm Split of Consulting Service
In October 2001, North Carolina-based CPA firm Dixon Odom PLLC merged in Birmingham, Alabama-based Summerford Accountancy, P.C., Certified Public Accountants and Fraud Examiners. The merger was a strategic fit for both firms and allowed Dixon Odom to expand the resources it could offer to clients in the areas of fraud examination, forensic accounting, business valuation and investigative services.
But coincidentally, in the same week that the merger was announced, in another part of the country, the SEC was announcing an investigation into questionable accounting practices at an energy firm called Enron.
The Enron story unravelled, the government stepped in to clamp down on public company financial reporting, Sarbanes-Oxley emerged, and CPA firms started splitting off key consulting services deemed to conflict with auditor independence issues.
And now, Summerford Accountancy, P.C., Certified Public Accountants and Fraud Examiners has come full circle and has amicably split from Dixon Odom, PLLC - a direct result of the rigorous corporate governance restrictions imposed by Sarbanes-Oxley.
"Some of the cases we would normally work on we couldn't" because of independence issues, says Ralph Summerford, who is a nationally known forensic accounting expert. "Anytime you have a large organization, there is the potential for conflicts of interest."
"We enjoyed a good working relationship with Ralph's firm before they officially became a part of Dixon Odom and although they will no longer be a part of the firm, we look forward to working with them in the future. This is a friendly departure, and we wish Ralph and the folks at Summerford Accountancy the best of luck as they resume their independent status," says Eddie Sams, managing member of Dixon Odom.