PwC 'rapped over cross-selling'
10 December 2008
The UK's accountancy standards regulator has criticized auditing firm PricewaterhouseCoopers (PwC) for "exploiting loopholes in the system" by allowing senior partners to sell consultancy services to its audit clients.
In its the first of its public reports on the UK's biggest auditors, the Financial Reporting Council said such cross-selling, while not outlawed under its code, is nevertheless "against the spirit" of regulations designed to prevent another Enron or WorldCom, the Financial Times reports.
It added that the practice, which involves executives who are not based in the audit department but who are involved in "key" audit decisions, has been frowned upon by the watchdog ever since the US corporate scandals of 2001 and 2002.
Overall, the FRC's report covered seven firms - including BDO Stoy Hayward, Deloitte & Touche, Grant Thornton, Ernst & Young, PKF and KPMG.
The study includes reviews of company-wide procedures and individual audits undertaken by the FRC's Audit Inspection Unit from April 2007 to March 2008.