TNS Global Tax Monitor Research
May 23 2002
The winds of change sweeping through the world of the Big Five accountants are proving to be beneficial. This is according to new research in the recently released 'Global Tax Monitor' from Taylor Nelson Sofres (TNS).
The accountancy giants are currently facing transformation in the form of 'forced separation' of audit and consulting practices, tighter regulation, and greater openness to scrutiny by clients' CFOs and tax directors. These changes are being demanded by large companies across North America and Europe.
The TNS research details the necessary shifts needed. It shows the key points to be:
- The overall reputations of Big Five tax practices, apart from Andersen, have remained steady or improved since the failure of Enron in December.
- Despite the collapse of Andersen's credibility in North America, where its reputation has halved on most corporate image attributes, the firm's overall reputation for tax advice has remained steady over the past 12 months in Europe.
- During the first quarter of 2002 KPMG, DTT and PwC have matched or bettered their highest client service scores since October 2000 (when the Global Tax Monitor was initiated).
- Only 25 per cent of CFOs and tax directors from North America's largest companies believe that a company's auditor should be completely independent from its tax advisers.
In addition, nearly three quarters of North American CFOs and tax directors think their company should reduce the amount of non-audit work that it undertakes with its auditor. However, most do not believe that tax advisers should be completely independent from auditors. This suggests that many North American buyers of tax advice see experience (and possibly cost) advantages to using the same firm for tax and audit advice.
Looking at Europe though, CFOs and tax directors appear more enthusiastic about separating tax and audit practices with just over half of respondents saying tax and audit advisers should be completely independent.
David Racadio, director of TNS Professional Services, said 'the fact that the majority of major tax buyers are not in favour of separating the tax and audit practices of leading firms is understandable as the experience gained during the audit process can be useful in adding value to tax advice. The real surprise is that Europeans are twice as likely as North Americans to favour complete separation of tax and audit practices, given the Enron/Andersen affair seems to have had a greater impact in North America than Europe.'
Racadio continued, 'The study shows that while the collapse of Andersen is causing turbulence in professional services markets, the credibility of the other leading players remains strong in the tax field. The fallout of the Enron/Andersen affair is bound to have a big impact on the audit, tax and consulting worlds, but belief in the remaining Big Five players is still strong. Contrary to recent press commentary, CFOs and tax directors of large companies have not lost confidence in the independence and professionalism of their tax advisers.'
The Taylor Nelson Sofres (TNS) Global Tax Monitor is a continuous research programme sponsored by tax advisers. It consists of 1,880 interviews globally conducted in the 18 months to 31st March 2002.
All articles 2006-22 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.
