Deloitte & Touche, the UK’s second biggest accountancy firm, is set to lose up to £15 million in consultancy fees from Vodafone.
It follows Deloitte’s decision not to hive off its consulting arm from its consultancy division. The mobile phone multinational said that the Sarbanes-Oxley Act, introduced in the US after the Enron accounting scandals, had forced it to choose between employing Deloitte as an auditor or as a management consultant.
As Vodafone’s shares are quoted in America, it is bound by the Act, so it kept Deloitte as its auditor only.
While several large American companies, including General Motors, Office Depot and AutoNation, have ditched Deloitte as either their consultant or auditor, Vodafone is the first major UK client to confirm it is doing so. Others are expected to follow suit.
Deloitte is the only major global accounting firm that has not hived off its consulting side. A Vodafone spokesman said: “The US law is very prescriptive as to what additional work an auditor can do. Cutting down on Deloitte’s consulting work was a no-brainer.”
Non-audit fees have traditionally been a lucrative source of revenue for accounting firms.