Travel group Airtours is believed to be reviewing its relationship with its auditor, Andersen, the accountancy firm embroiled in the Enron scandal, in an attempt to quell shareholder concerns.
Last year, Airtours paid Andersen £1.2m for audit work but £7.2m for other services, a practice that has become an issue after the collapse of Enron, where Andersen was both auditor and consultant. An auditor's independence can be compromised, or perceiv- ed to be compromised, because the more lucrative consultancy work could mean it is more loyal to the company than to shareholders.
One institutional shareholder in Airtours, who declined to be named, said he had raised these issues with them, adding: "I think shareholders will see demonstrable improvements in terms of the perception of the relationship, and the independence of the auditors ... whether on the nature of [Andersen's] service or the quantum of fees."
Airtours' annual general meeting is on Thursday, when shareholders vote on the reselection of Andersen. Airtours chairman David Crossland will probably make a statement.
All the big five accountancy firms also have consulting arms. Last week Ernst & Young, PricewaterhouseCoopers, Deloitte & Touche and Andersen said they would stop providing some consultancy services if they were also auditor.
Yesterday Howard Davies, the chairman of the watchdog Financial Services Authority, said they would be consulting formally on using auditors who also perform other work.Reuse content