Accounting firms have for the first time offered to open their books to public scrutiny as part of a package of measures being reviewed by the Treasury and the Department of Trade & Industry.
Although the level of disclosure will fall short of a publicly listed company's report and accounts, it will provide better access to the workings and pay structures of the notoriously secretive firms than ever before.
The issue emerged as one of the key planks of the joint governmental review of the profession, launched last year in the wake of the Enron scandal. Also being considered are audit rotation and the level of non-audit services an audit firm can provide.
Peter Wyman, president of the Institute of Chartered Accountants in England & Wales, has submitted the offer of greater transparency on behalf of the largest 14 firms. He said: “I think it's important because people are suspicious of what they can't see and understand.
“This will remove the suspicion, though I doubt anyone will be much the wiser.”
The reporting structure will be based on that of a limited liability partnership. KPMG and Ernst & Young already publish their figures on this basis and PricewaterhouseCoopers is planning to follow suit this year. The profit and loss account and the balance sheet will be much the same as a listed company's but the figures do not have to be audited.
However, there will be greater description of the governance and quality control arrangements in place as well as other information to determine auditor independence. A clearer picture of partners' salaries will also be drawn up.
The concession comes ahead of the DTI and Treasury's final meeting on auditor independence tomorrow. A full report is expected by the end of the month.
It comes at an especially sensitive time for auditors, who face the prospect of stringent controls from the US Securities & Exchange Commission. The SEC is expected to rule on whether the firms should be allowed to conduct tax work alongside their audits this week.