News

The Wall Street Journal: Big Four accounting firms come under regulator’s scrutiny

WASHINGTON—Regulators are carrying out a sweeping investigation of conflicts of interest at the nation’s largest accounting firms, asking whether consulting and other non-audit services they sell undermine their ability to conduct independent reviews of public companies’ financials, according to people familiar with the matter.

The Securities and Exchange Commission probe highlights the agency’s new focus on financial-market gatekeepers such as accountants, bankers and lawyers. These firms help companies raise capital and communicate with shareholders, but also have duties under federal investor-protection laws. Auditors are a shareholder’s first line of defense against sloppy or dodgy accounting.

Speaking at a national conference of auditors in December, SEC Enforcement Director Gurbir Grewal said: “You will see that we will have a firm commitment moving forward to continue to target deficient auditing by auditors, auditor independence cases, cases around earnings management.”

The SEC’s Miami office last year sent letters seeking information about client work that could cause auditors to violate rules requiring they be independent of clients whose finances they inspect, according to the people. They say the letters were sent to some smaller accounting firms as well as the Big Four: Deloitte & Touche LLP, Ernst & Young LLP, KPMG LLP, and PricewaterhouseCoopers LLP.

An expanded version of this story appears on WSJ.com.

Popular stories from WSJ.com:

Russia Bombards Kyiv as European Leaders Head to Ukraine’s Capital

Saudi Arabia Considers Accepting Yuan Instead of Dollars for Chinese Oil Sales

After Walt Disney, Robert Iger Heads to the Metaverse

What's your reaction?

Excited
0
Happy
0
In Love
0
Not Sure
0
Silly
0

You may also like

More in:News

Leave a reply

Your email address will not be published.