E&Y next in line for a good spanking?
October 13, 2005
Assuming Accountancy Age is correct, then Ernst & Young looks set to get a financial thrashing by the JDS. I say assuming because the story is short on facts and long on speculation. Nevertheless, it seems to me the Big Boys need to know they can’t ride a coach and horses through ethics, simply because they won a settlement over Equitable Life.
It may not be pleasant, but if the public is to have trust in Chartered Accountants, then those at the top of the pile need to be seen to behave in a professional manner. Those that don’t should be punished accordingly - regardless of position.
The Age says:
"The largest fine in the tribunal’s history so far
is Coopers & Lybrand’s, which had to pay £1.2m in fines and more than £2m in
costs for its role in the Maxwell affair."
The JDS has a real opportunity to show the world it means business. I suggested a £20 million penalty. That’s a flea bite on their recently reported fees which totaled £945 million, with average profit per partner of £561K. On a rough partner count, and taking into consideration the new intake number, I reckon that’s about £260 million (give or take)
In its announcement, E&Y says:
‘Nick Land, Chairman of Ernst & Young in the UK comments
“We anticipate that the growth we’ve experienced as a result of our
clients’ IFRS and SOX challenges will level off in the current year,
although our clients will no doubt face other regulatory issues. Going
forward, we are expecting our TAS and Tax practices to benefit from
greater transaction activity and our new Advisory Services practice to
establish itself as a leader in its own market place.‒
No change there in the spin treatment.
When (and if) the proverbial hits the fan, it might be wise to consider how the issue of trust is communicated to clients. I’d be addressing that now. It will be a differentiator.
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