New Report May Reopen Auditor Independence Debate
An ongoing battle between the accounting profession and the SEC over the last year has led to a compromise on the question of auditor independence. But some numbers are now in which could re-open that discussion and cause the SEC to again scrutinize the line between auditing and consulting work.
According to a recent article in the Washington Post, audit fees of public companies make up only about a quarter of total fees paid to an accounting firm by public companies. The numbers come as a surprise to Lynn Turner, Chief Accountant of the SEC.
The new disclosures again raise concerns among regulators and investors alike about the ability of public accounting firms to be independent and jeopardize their consulting revenue by being too tough in an audit.
Audit firms were paid an average of $2.2 million for each corporate audit, and $5.9 million for selling other services to the audit client, the study found. It was based on 563 corporate proxy reports filed with the SEC by Fortune 1000 companies as of April 30.
Among the findings:
|Company||Auditor||Audit Fees||Consulting Fees|
|General Motors||Deloitte & Touche||$17M||$79M|
|Pugent Sound Energy||PWC||$543,000||$15.6M|
"Had the data been available months ago, the outcome of the fracas between the SEC and the accounting industry might have been different," said Lynn E. Turner, the SEC's chief accountant, who advocated tougher restrictions and issued the recent report. "It certainly would have provided, I think, some information that was very supportive of where the commission was headed," Turner said.