SOME of the City’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.
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’s autonomy.
One of the options the APB is considering is a ban on the sale of certain services – such as tax planning and management consulting – as well as a greater level of disclosure in instances where an accountancy firm has sold extra products to an audit client.
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.
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.