Auditors engaging in non-audit consulting? A major accounting firm pushing for more consulting work? Recently, the SEC’s chief accountant indicated that there were concerns at the SEC regarding auditor independence as a result of this push for non-auditing work from accounting firms.
In particular, the concern related to auditing firms boosting their non-audit consulting business. This is particularly troubling given this was a issue was one of the impetuses giving rise to the enactment of the Sarbanes-Oxley Act. This SEC concern relates to there being developed a conflict of interest. Such a conflict may result in a diminution of auditor independence.
Although the SEC has spoken on this topic, no action has yet been announced. We would not be surprised if we did not SEC attempt to “nail some hides to the shed.”