PwC and Grant Thornton respond to the European Commission Green Paper
In the last week of February, Grant Thornton and PricewaterhouseCoopers (PwC) both issued statements in response to the European Commission Green Paper. The document is the result of a public consultation on possible ways to enhance audit quality after the 2008 crisis. The most controversial suggestions include mandatory audit firm rotation after a specified period and mandatory joint audits (more than one firm simultaneously auditing each company).
Whereas PwC, a member of the Big Four (along with Deloitte, KPMG and Ernst&Young), stated that there is no proof that the suggested measures will have positive effects, Grant Thornton supported the paper. As of the closing of this issue of CAPITAL ABERTO, the other firms had yet to present their responses.
Ana Maria Elorrieta, a partner at PwC Brazil, asserted that certain measures would backfire. "Every time you switch to a different auditor, you lose all the knowledge that was accrued about that client", she says.
Marcos Sanches, a partner at Grant Thornton Brazil, supports the document but agrees that audit rotation is a controversial suggestion. He believes that rotating teams from a same audit firm would be a more effective way of preventing corruption and other misconduct. Sanches also criticized joint audits: "it's very hard to merge two different work methods", he states. He praised other parts of the document, particularly those meant to fight market concentration. "Many company owners feel compelled to hire one of the Big Four, but doing so does not guarantee lower cost or better service", he believes.
The EC consultation that originated the Green Paper was open to the public at large, including individuals and organizations. The suggestion package may be used to define new rules and regulations for the market, but no specific date has been set for that purpose.