Professional services firm BDO plots out break-up plan
Accountancy and professional services firm BDO is plotting out how it will carve off its auditing arm from the rest of its UK business, following a withering report from MPs on the embattled sector.
BDO's head of audit Scott Knight said the firm had run through a range of scenarios in response to the report from the Business, Energy and Industrial Strategy (Beis) Select Committee which scolded accountancy giants for prioritising profit over the independence of their audit functions.
One of BDO's scenarios, Knight said, was splitting off BDO's UK audit practice from the rest of BDO.
It would operate behind a so-called Chinese wall, a separate subsidiary with different governance, board make-up and file separate accounts.
MPs on the Beis committee, chairs by Labour's Rachel Reeves, called on the Big Four (PwC, EY, Deloitte and KPMG) to split their audit functions from the rest of their professional services businesses to increase independence and competition.
BDO was spared such a rebuke from MPs, but Knight said rival firms would be drawing up similar plans and the entire sector should be pro-active after the report.
"Sticking your head in the ground is not really an option".
The scenario planning, first reported in the Sunday Telegraph, could pile pressure on BDO's larger rivals, which have publicly resisted the calls to carve off their audit units.