Industry Monitor

December, 2011

1. 1. Deloitte, Ernst & Young, KPMG and PwC could be forced to split into separate audit and consulting arms under EU proposals from Commissioner Barnier. The audit firms would have to rename and rebrand operations, radically changing their business model. (BBC News, 30 November)
2. The introduction of IFRS in 2005 caused the financial crisis, according to a report by the Local Authority Pension Fund Forum. UK and Irish banks were most affected because they adopted IFRS more comprehensively than EU counterparts. (Daily Express, 1 December)
3. Ten years after Enron filed bankruptcy, the limit of regulatory power has been acknowledged and oversight of audit firms has become tighter. RSM CEO Jean Stephens says that the PCAOB, the US watchdog created after the scandal, is still maturing in its aim to regulate the industry. (Financial Times, 1 December)
4. RSM Tenon in the UK won 'National Firm of the Year' at the British Accountancy Awards. Judges said, "RSM Tenon understands corporate responsibility and its value to the business. The firm punches above its weight and a huge belief that it will succeed and carve out a powerful market niche." (Accountancy Age, 30 November)
5. The European Banking Authority has called for the IASB to engage in a "period of calm" before engaging in any new projects to improve accountancy standards, asserting that the IASB's priority should be finalising financial instruments and insurance contracts standards. (Global Financial Strategy, 30 December)
6. BDO has reported a 4% increase in revenues across its international network, led by a strong performance in the Middle East. Total combined fee income for the year ended 30 September 2011 for all BDO member firms amounted to over €4 billion. (Accountancy Magazine, 25 November)
7. CFOs are expected to hire more accountants and other finance professionals early next year, but are having trouble finding skilled professionals to fill the positions, according to a survey by staffing services firm Robert Half International. (Journal of Accountancy, 1 December)
8. As European banks reduce international lending, it is negatively impacting importers and exporters in Asia, Africa and Latin America. It is more difficult to get loans as banks struggle to comply with international accounting rules mandating they maintain higher capital levels. (USA Today, 1 December)
9. The Japanese arm of Ernst & Young is setting up an external panel to probe its audit of Olympus Corp. E&Y says this is only an internal investigation to verify some of the claims made in the independent report published by Olympus earlier this week. (International Accounting Bulletin, 9 December)
10. A long-awaited decision on whether US companies will switch to IFRS was pushed back Monday, as US SEC will need "a few additional months" to complete work on its recommendation to the commission about whether US companies should adopt the international rules. (Wall Street Journal, 6 December)
11. China could become the most desirable site for capital foreign listings for global companies in 15 years, PwC predicted in a new report. (Business Day, [South Africa], 9 December)
12. UK Prime Minister David Cameron has refused to agree to proposed European Union treaty changes on the grounds that they could damage the UK's financial services industry. (Accountancy Live, 9 December)
13. The Institute of Chartered Accountants of India (ICAI) has begun taking action against PwC India audit managers nearly three years after Satyam, India's largest corporate fraud. (International Accounting Bulletin, 6 December)
14. The insolvency of an Islamic mortgage lender in Canada may hinder the growth of sharia-compliant finance in North America, where the industry has struggled to gain traction in the absence of a supportive regulatory framework. (Reuters [Canada], 5 December)
15. The UK Competition Commission has outlined the areas it will investigate in its probe into statutory audit market concentration for listed companies. The commission said the body will look at any "features of this market which prevent, restrict or distort competition and, if so, what action might be taken to remedy them". (International Accounting Bulletin, 8 December)