Do watchdogs have  the stomach to take on the likes of Deloitte?

Outlook: Accountancy’s Big Four have the financial clout and the wherewithal to fight their regulator

There’s a stark difference in their reactions, when faced with disciplinary measures, between banks and the accountancy firms that audit them. Typically, when the former get caught with their pants down they’re quick with the crocodile tears, rapidly issuing apologies together with promises to be good boys in future after the hammer has fallen.

They generally do their best to assume the position and settle quickly, paying up even though their private views on their treatment will often differ markedly from their public pronouncements.

Not so auditors. Yesterday Deloitte and its former partner Maghsoud Einollahi lost their appeal against charges by regulators that they failed to manage conflicts of interest in relation to advice given to MG Rover and to the disgraced businessmen, known as the Phoenix Four, who spent five years getting rich while the company spiralled towards oblivion. Incredibly, given that MG Rover breathed its last in 2005, this may still not be the end of the matter as the firm looks at whether there are points on which other appeals can be lodged while furiously attacking the ruling.

“Surprised and disappointed,” poor old Deloitte was moved to opine, warning of potentially dire consequences for the sort of advice its staff will be able to provide to businessmen in future. One might question why we should be at all worried about this if it prevents them from getting bad advice. But, as Deloitte was quick to point out, the quality of the advice it gave to the Phoenix Four and MG Rover was not actually questioned by the regulators. Nor (incredibly) was the audit work carried out on MG by, you’ve guessed it, Deloitte.

There may be very good reasons why the watchdogs chose to take Deloitte on over what look to be rather limited, and rather technical, breaches.

When you are faced with an aggressive opponent armed with the best lawyers money can buy, it’s often advisable to narrow your field, concentrating your fire on areas in which you stand the best chance of winning.

That’s why Al Capone was eventually imprisoned for tax evasion rather than for high crimes and misdemeanours.

The Big Four accountancy firms have the wherewithal and the financial clout to fight their regulator, and they have proved to be more than willing to do so. It’s not in their interests to allow the development of an active and aggressive watchdog to oversee their activities. Tangling disciplinary action in red tape through the use of endless appeals is one way of doing that.

If the Financial Reporting Council, which has taken on the role of watchdog, is really interested in improving the regulation of accountancy firms it will have to have the stomach for more of these battles. It may ultimately need to get down and dirty, and to make adroit use of resources such as (perhaps) the Treasury Select Committee and even the media.

Is it willing to do this? That’s not altogether clear. It’s worth noting that despite the pointed questions raised by the Parliamentary Commission on Banking Standards, it has still not launched formal proceedings against the auditors either of HBOS or of Royal Bank of Scotland. Even if it does, we’ll probably still be waiting for the result in 2020.

A merger threatened  by a clash of egos

Omnicom and Publicis reckon they can save their shareholders $500m (£325m) through their $35bn tie-up.

The marriage of the second and third biggest advertising firms is being dressed up as a merger of equals, so, in theory at least, there’s no premium to either set of shareholders. Which means that those savings are a rather important part of the package.

Unfortunately what could be one of the biggest single savings – on the salary package of one of the two existing CEOs – won’t be made. John Wren, Omnicom’s boss, and Maurice Levy, chief executive of Publicis, are slated to be “co-CEOs” if the deal is completed.

Such mega-mergers are a risk at the best of times, particularly when you operate in industries reliant on the fostering of creative talent.

Their rival WPP, and its various affiliates, will be watching closely as the two try to jam their various bits and pieces together. These other firms will be well aware that you can often achieve as much by spiriting people away from rivals as you can by buying those rivals.

There is still a rationale for the merger beyond cost savings. A combination could help this new behemoth bulldoze its way into lots of exciting growth markets – provided that two powerful chief executives with big salaries and big egos can successfully pull off their double act: a set-up which doesn’t have the happiest of histories.

That’s one reason why another powerful CEO with a big ego may not feel all that concerned today. WPP’s Sir Martin Sorrell might  just enjoy watching this one from the sidelines.

A high-flying way to  promote your brand

Fancy seeing your brand on the fuselage of a plane next to that of Ryanair? Yes, the low-cost airline is planning to sell ad space on its aircraft. They will still bear the Ryanair logo, but other companies will be able to add theirs for a small(ish) fee. An excellent idea, you might think, and why not? After all, what better brand to hitch your wagon to? As Michael O’Leary keeps saying, it’s the world’s favourite airline. Ryanair absolutely loves its passengers, and treats them like gods. Flying with Ryanair is a wonderful experience, and everyone who does it arrives at their destination rested, relaxed and ready for a laughably short journey into the centre of the City they’re planning to visit.

The tickets are cheap, and other charges, such as for luggage, credit card use, replacing lost tickets, are minimal, etc, etc. Why on earth wouldn’t you want to hitch your brand to all that?

Start your day with The Independent, sign up for daily news emails
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before