Mr Barnier's audit reforms have prompted furious lobbying in Brussels, particularly since the leaking of draft proposals that triggered protests from the Big Four and business groups, which feared they would increase costs.
Michel Barnier, the EU internal market commissioner, wants to split the profession’s “Big Four” – PwC, Deloitte, Ernst & Young and KPMG – into separate audit and consulting arms in Europe as part of a package of measures designed to improve the vetting of accounts. The provision of both audit and consulting work by accounting firms has long been seen as a potential conflict of interest. The EC reforms would stop all auditors from offering most types of consulting to their audit clients in the EU.
The Commission also wants to go well beyond the limits imposed on “non-audit” work in other countries such as the US by forcing the biggest networks to split their member firms into separate audit and consulting businesses if they exceed a certain threshold.
One senior Big Four accountant called this “completely disproportionate”. But before becoming law, the proposals could be altered in negotiations between MEPs and finance ministers. This could see the rules tweaked to at least permit the Big Four to keep audit and consulting side by side.
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