FINANCIAL EXECUTIVES
INSTITUTE
FEI Auditor Independence Survey
Write-in Comments to Question 6
“Do you have any comments on the relationship of consulting work as it relates to the
independence of your external auditor?”
Our Auditors/Independent Accounts, appear to be aware of the independence rules. We are not aware of
any issues in that regard.
Primarily Tax Consulting.
Believe it has had no effect.
We try to limit it to tax. Tax because of the expertise and knowledge of company. We use other big six
firms for consulting in other areas to maintain independence.
We spent considerable time with our audit committee reviewing the nature of non-audit services
provided, and our auditors have reviewed with them steps taken inside the firm to protect independence.
This is a value-added service to us. The accounting firm understands our business and weeks which
makes the consulting work more effective.
We believe that any consulting work performed by our auditors should exclude any areas which may
impact the financial statements. Such areas would include valuation of derivatives of valuations of
purchase business acquisitions.
We monitor consulting work done by our audit firm very closely to ensure independence.
We have used our Audit firm in various capacities over the years and independence has never been a real
concern.
Consulting work was associated primarily with acquisition and divestiture support, tax services and Y2K
assessment. Percentage of such fees in relation to audit fees would ordinarily be lower without recent
work performed related to one-time transactions and Y2K.
I believe that our external auditors do maintain their independence.
We maintain specific limits which require approval by the audit committee prior to the performance of
consulting work. In addition, the nature of each major assignment is reviewed prior to the assignment to
assess the impact on Ind.
No
We have from time to time used our external auditors for very modest consulting projects that in no way
would raise independence questions. In 1998 we used our external auditing firm's systems consulting
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group for a systems project at facs. a multiple of the annual audit fee. We chose them as a good match to
our needs. Because of the one-time nature of the project, we did not have independence concerns.
I've never experienced any conflicts.
Consulting fees generally never exceed 10% of our normal audit fee. This helps avoid any conflict of
interest on the part of the audit team.
Do not use your auditor's firm for computer systems consulting work. There can be disputes over poor
work and fees which can impact auditor's independence.
1. Consulting was mostly Y2K related. 2. Tax accounting firm is a totally different firm from the
auditing firm.
I believe that our external auditors do maintain their independence.
CPA's, through their code of ethics, must maintain independence. The audit firm has a great knowledge
of our organization and its inner workings and needs. That is precisely why they are used as consultants.
We expect them to remain independent.
We have experienced services conflicts as a result of the "non-attend" service and most likely will retain a
different accounting firm in the future for audit services.
As long as auditors continue to be paid by their clients, they will not be completely independent. I
believe a firm should be able to go to whatever source to obtain the best consulting services. In many
instances, this may be the external auditor since they are usually most familiar with the business
operations, culture, etc.
We currently have two firms providing internal audit and external audit work. Therefore, our analysis
may not be representative. We spread the work out between the two firms. The info I have included here
is only for the external audit firm.
I believe that our external auditors do maintain their independence.
Has had no noticeable effect on independence so far.
Most consulting work is tax related, particularly international, and as such does not cause a significant
concern regarding independence.
Q4. Amount for 1999 was unusually high due to consulting on large, complex lease agreement.
No independence problem perceived.
I believe that our external auditors do maintain their independence.
Includes contract audit services and mostly international tax work.
The Audit Committee approved a policy whereby "consulting" work is measured and cannot exceed 50%
of "audit" fees (without the knowledge of the committee).
I think many firms today have enough separation between consulting and account services so that
independence is not compromised.
Yes, there are concerns.
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1. Most of consulting was for assistance in SAP implementation. 2. Regarding tax returns: US-no
Answers-Yes
The consulting group is separate from the audit group. Furthermore, the consulting group is not involved
in the design of internal controls.
Our experience indicates that consulting work in no way impairs the independence of our external
auditors.
Independence can be achieved with proper awareness and discussion of issues at hand.
Should be separate activity from separate enterprise.
No area directly involving internal controls or major systems can be consulted on our outside consultants.
Total consulting fees are limited by the audit committee.
We have predetermined limits but review each case and contract with the best firm.
Strong governance in the form of tight approvals and review at audit committees are a must.
Currently we do not see conflict of independence-however, if consultants were involved in project with
potential accounting impact, outside world may well see conflict.
Independence has only been an issue in one instance. At that time our external audit firm declined a bid
submission.
Consulting work is less than 10% mostly related to accounting or tax work that our auditors can perform
efficiently as a result of familiarity with our company. Other consulting work is avoided.
Don't see any independence conflict--we open the doors on most consulting work in an effort to find the
best resource possible. Our external auditor does not have a lock on consulting work.
Most of consulting was for acquisition in UK and actuarial/admin work for UK Pension.
I do not believe the consulting work performed by our auditors has a significant impact on their
independence.
We try not to use our external auditors in a consulting roll, unless relating to specific accounting
transactions.
Don't use as consultants to any extent.
Our auditor/CPA firm process all of our state tax returns, K-1's and S-Corp. returns. No tax returns are
done on the premises.
Consulting work done (for acquisition) by another office of our audit firm besides the one doing our attest
work.
For purposes of the survey I considered due diligence work on acquisitions to be attest services.
We are happy with our consulting auditors.
Do not use auditors as consultants for accounting procedure/systems work. Minimize other involvements.
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Unrelated - totally different people involved.
The fact that our auditors provide consulting services does not appear to have any effect on their
independence based on conduct observed throughout the audit process.
Consulting work primarily concerned M & A activity.
This consulting is primarily tax structuring & business planning.
What is definition of consulting? If viewed as systems and process consulting, I struggle with your
auditors helping design systems and processes they will audit. If fact, we have consultants which were
part of public accounting firm not having much focus on internal control as they viewed this as something
the audit should deal with. This was disturbing to me as internal control should be part of best practices.
No consulting work performed.
This issue should be resolved on a situation by situation basis by the Audit Committee. It would be
difficult to write a one size fits all rule that would not limit a company success to assistance from the
auditor when it made business sense and didn't impair independence.
Usually try to use consulting firms other than my audit firm.
Our Company utilizes the consulting services of auditors to a very limited extent.
I believe consulting in financial systems/internal controls would jeopardize the auditors independence.
Only significant consulting work is tax related. I do not believe this impacts the independence of the
auditors or the nature/scope of audit work performed.
Tax partners look at managing tax liability reserves much differently than audit partners.
We have noted few concerns.
I do not believe that consulting work provided by external auditor has any bearing on the independence of
external auditors.
Has had no noticeable effect on independence so far.
Consulting work by external audit firms, beyond the accounting function of recording and presentation, is
inappropriate. Independence is tough enough already.
I hold my breath as sometimes I feel they have crossed line in duties.
I feel they should be separate and not from the same firm.
Based on the positions taken by our auditors on some recent accounting issues, the consulting work
performed by them for us does not seem to be effecting their independence.
Most consulting has been in the area of tax strategies. There have been no issues which compromised
independence.
Full disclosure to Audit Committee every year.
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Consulting work performed has minimal risk to audit.
Consulting engagements are narrow in focus and on specific issues. Have at times used an alternative by
5 as a precaution (not required by policy).
Board Audit Committee reviews annually. This relationship is part of the process when considering
whether to use our audit firm vs. someone else.
Seldom use auditors for anything other than tax consulting. Therefore independence maintained.
Consulting work has no effect on independence of the audit team.
[COMPANY] manages very closely to keep non-audit work under control. Enthusiasm emanates from
audit committee.
There clearly is the potential for a conflict of interest. I think that any auditor would tend to look at things
differently based on whether or not their firm had any input on a matter or issue.
Not an issue. We use a variety of consulting firms. The few assignments done by auditor does not impair
independence.
Very minor consulting done
It is difficult to understand how the two can be kept independent.
Option for internal control work being looked at. Use tax services, since no current tax manager in-house.
Technology audit firm cannot do consulting work on a contingency fee basis for attest clients. I have
never encountered any instances of possible independence problems when auditor has done consulting.
No concerns in this area.
Most consulting work has been done by XXX Consulting vs. XXX Auditor. Overall account partner
would liaise with both areas but any engagement of AC had a separate AC partner assigned.
Independence did not appear to be an issue.
It's an important part of our decision making process. We want to insure our own "independence" is not
tainted (from an investment analysts' perspective) as we prepare to go public later this year.
Accountants, like banks, seem to be moving into other services that raises questions relating to
"motivation" of suggested engagements.
I feel confident that the consulting work (due diligence, benchmarking, etc.) that Arthur Andersen has
done for us in the past has been done with a high degree of independence from the audit.
Our auditor is [XXX]. Firm is large diverse and different areas seem separated by the "Chinese Wall"
fairly well.
Audit fee's were 100K to 500K - consulting fees were $1.5 million+. I think it has a direct impact to the
audit independence.
Auditors do audit work (50,000) quarterly reviews ($3k each x3) tax preparation ($12,000) and special
non-recurring work on S-3's, mergers and acquisitions etc. (generally $50,000-$100,000 per year), but
very little consulting.
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This has not been a problem for us.
I'm very comfortable with the independence of my auditors as it relates to consulting work.
Generally, do not believe it impedes independence if fees are fixed and reasonable and customary for
comparable professional services. Based on Audit forms skill set and knowledge (both in general and
client specific), they should be able to provide cost beneficial solutions to their clients.
In order for external auditor to be awarded any consulting work, they must demonstrate to our Board that
independence is not impaired. Very little consulting work has historically been awarded to our external
auditors except for tax consulting.
I believe consulting in financial systems/internal controls would jeopardize the auditor's independence.
As all Big 5 audit firms compete per consulting dollars, we are seeing more presentation on what services
can be provided. This has not become an independence issue especially with all of the latest awareness
being focused in this area.
Doesn't effect independence in my opinion.
Only consulting work relates to IRS audits and other tax issues.
No-normal tax consulting
I have not noticed it affecting independence.
Relationship is independent, not impaired by consulting work.
We engage a number of different auditors for consulting work and/or special project assignments. Use of
the statutory auditors for consulting work generally works well due to their understanding of the business
and culture of the Company. The objectivity and independence of the auditors has not been seen as an
issue.
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