Big 4 Partnerships May Consolidate into Single ‘Global Partnership’

Posted on 11. Jan, 2006 by in Accounting, News reported this week that William Parrett, chief executive of Deloitte Touche Tohmatsu, the firm’s global umbrella organization, said that he expected “both from a business standpoint and a regulatory standpoint, [that the] larger firms will evolve to a global partnership over the next decade.”

This is a fairly large move for accounting firms. Traditionally, accounting firms consist of networks of member partnerships established in the countries in which they operate. For example, there’s a partnership in N. America, S. America, W. Europe, etc. with a CEO serving as a sort of global overseer. However, as the article points out, such a change to a single global partnership would not be easy.

First, liability policies in certain countries would need to be overhauled. The problem with any global company is consistency – and auditing is no exception. Among different countries the quality of auditing services is different depending on the culture, education, and leadership within that country. With a global partnership, however, the level of services would need to be consistent in order to support consistent liability policies to cover mistakes and/or a lack in due dilligence.

Personally, I think a global partnership would be stretched too thin. I believe that if the global leadership can work on improving consitency in auditing standards without consolidation then everyone would be better off. Perhaps forming some sort of global coalition to apply consistent standards could be created. But by combining the partnership structure, the partners would no longer be dealing with issues specific to their geographic area – something that they are overly-consumed with already – but instead need to be worried about the auditing practice in Italy. And that is assuming that the partnership would truly be global. More likely is the scenario that the partners would have some sort of geographic assignment within the partnership – reverting to the old way of doing things under a new organizational structure. In essence – not changing a thing.

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