Clorox names Ernst & Young as auditor, replacing Deloitte

NEW YORK (Dow Jones/AP) — Clorox Co. said Tuesday it named Ernst & Young LLP as its auditor, replacing Deloitte & Touche LLP. The consumer- products giant didn't give a reason for the change, which takes effect Feb. 15.

But it apparently comes as a result of Deloitte failing to complete the separation of its auditing and consulting units in time.

Deloitte will complete the audit of Clorox's results for the second quarter ended Dec. 31.

Deloitte Consulting was working on an enterprise resource planning system for Clorox of Oakland, Calif.

Clorox said it was told by Deloitte that its consulting arm and Deloitte & Touche, the auditors, were separate legal entities.

Furthermore, Deloitte said it was planning to spin off its consulting division before the end of 2002.

At that time, Clorox's board determined it would continue to use Deloitte as its auditor. However, if the spinoff of the consulting business didn't occur, it would seek another auditor for fiscal 2003.

Clorox has used Deloitte as its auditor since January 1999.

A number of companies, including Walt Disney Co., are trying to increase the independence of their accounting practices by not employing the same firms to provide nonauditing consulting work.

Clorox's decision also anticipates changes to the rules governing auditor independence that were proposed by Congress last summer in the Sarbanes-Oxley Act.

Later this month, the Securities and Exchange Commission is expected to consider proposals that could result in a ban on auditors from selling nonaudit services, such as legal advice and systems design, to clients.

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