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?

Denny Miller in 1959 remake of Tarzan, the Ape Man
Arts and Entertainment
Cheryl despairs during the arena auditions
tvX Factor review: Drama as Cheryl and Simon spar over girl band

Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
i100Exclusive interview with the British analyst who helped expose Bashar al-Assad's use of Sarin gas
Angel Di Maria celebrates his first goal for Manchester United against QPR
Football4-0 victory is team's first win under new manager Louis van Gaal
Arts and Entertainment
newsIn short, yes
Arts and Entertainment
Rob James-Collier, who plays under-butler Thomas Barrow, admitted to suffering sleepless nights over the Series 5 script
tv'Thomas comes right up to the abyss', says the actor
Arts and Entertainment
Calvin Harris claimed the top spot in this week's single charts
BoxingVideo: The incident happened in the very same ring as Tyson-Holyfield II 17 years ago
Groundskeeper Willie has backed Scottish independence in a new video
Arts and Entertainment
The Doctor poses the question of whether we are every truly alone in 'Listen'
tvReview: Possibly Steven Moffat's most terrifying episode to date
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Cara Delevigne at the TopShop Unique show during London Fashion Week
The life-sized tribute to Amy Winehouse was designed by Scott Eaton and was erected at the Stables Market in Camden
peopleBut quite what the singer would have made of her new statue...
England's Andy Sullivan poses with his trophy and an astronaut after winning a trip to space
peopleThe actress has agreed to host the Met Gala Ball - but not until 2015
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

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Training Coordinator / Resource Planner - City, London

£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Day In a Page

These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week
The fall of Rome? Cash-strapped Italy accused of selling its soul to the highest bidder

The fall of Rome?

Italy's fears that corporate-sponsored restoration projects will lead to the Disneyfication of its cultural heritage
Glasgow girl made good

Glasgow girl made good

Kelly Macdonald was a waitress when she made Trainspotting. Now she’s taking Manhattan
Sequins ahoy as Strictly Come Dancing takes to the floor once more

Sequins ahoy as Strictly takes to the floor once more

Judy Murray, Frankie Bridge and co paired with dance partners
Wearable trainers and other sporty looks

Wearable trainers and other sporty looks

Alexander Wang pumps it up at New York Fashion Week
The landscape of my imagination

The landscape of my imagination

Author Kate Mosse on the place that taught her to tell stories