Coming: Auditor Cataclysm?

Bolstering that trend: An increasing number of corporate clients now say they will no longer purchase consulting services from their independent auditors. Such a shift will make it far less likely that accounting firms will treat audit services as a loss leader. In the past, some firms have been willing to take a hit on audit contracts because the engagements gave them an entree to flog more-lucrative consulting services to clients.

In fact, Julia Grant, an accounting Professor at the Weatherhead School of Management at Case Western Reserve University, believes the new regulatory regime may reinvigorate the entire profession.

"It's too soon to say that firms will quit doing the auditing work," Grant insists. "It's the auditing work that gives them such a rich, in-depth knowledge of the business. If you're a general-purpose, all-service firm, you'll still need to hang on to the audit services."

Grant also points out that Sarbanes-Oxley was intended to purge the industry of auditors who had either let their skills erode — or engaged in unethical practices.

"From the standpoint of the auditing industry," she says, "that's a good thing."

Just don't tell that to the 800 or so auditing firms that will be getting out of the business in coming years.

• « previous
• 1
• 2