views

Accounting firms facing ban on sale of products to audit clients

SOME of the City&rsquo;s biggest accounting firms are facing restrictions on the services they can sell to audit clients, after the financial reporting watchdog launched a review of rules designed to maintain auditor independence.<br /><br />The Auditing Practices Board (APB), a division of the Financial Reporting Council, said it would review whether the sale of non-audit services to audit clients could jeopardise an accountancy firm&rsquo;s autonomy. <br /><br />One of the options the APB is considering is a ban on the sale of certain services &ndash; such as tax planning and management consulting &ndash; as well as a greater level of disclosure in instances where an accountancy firm has sold extra products to an audit client. <br /><br />Some politicians are worried that an accountancy firm could give favourable opinions on a company it hopes to win other business from, creating a conflict of interest.<br /><br />Since the Enron scandal, which highlighted the perils of auditors becoming too entwined with clients, British audit committees have been required to monitor non-audit services. The FRC says revenue from non-audit services has gone down in recent years.