Advisory Services Rise Again at Large Audit Firms

Nearly one decade ago, most of the large accounting firms divested their advisory services business. The divestitures were motivated not only by business and management reasons, but by regulatory pressures as well. In particular, regulators were concerned that audit quality could suffer if advisory...

Full description

Saved in:
Bibliographic Details
Published in:The CPA journal (1975) 2012-08, Vol.82 (8), p.58
Main Authors: Dey, R Mithu, Robin, Ashok, Tessoni, Daniel
Format: Article
Language:English
Subjects:
Accounting firms
Agreements
Assurance services
Audit quality
Auditing
Audits
CPAs
Divestiture
Initial public offerings
Public Company Accounting Reform & Investor Protection Act 2002-US
Quality of service
Revenue
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Nearly one decade ago, most of the large accounting firms divested their advisory services business. The divestitures were motivated not only by business and management reasons, but by regulatory pressures as well. In particular, regulators were concerned that audit quality could suffer if advisory services threatened auditor independence. As a result of the divestitures and the adoption of the Sarbanes-Oxley Act of 2002, advisory services revenue represented only a small share of accounting firms' revenues circa 2007. In recent years, however, advisory services revenue has risen again, renewing concerns of its potential effects on audit quality. But auditor independence is no longer viewed as the primary threat to audit quality; instead, concerns revolve around the audit firm's culture and the quality of the resources allocated to advisory versus assurance services. Presented is an examination of the rise and fall -- and rise again -- of advisory services within public accounting firms.
ISSN:0732-8435