BERARDINO: That’s how all these practices started

8August 2022

BERARDINO: That’s how all these practices started

MR. It wasn’t because our predecessors were geniuses and said we need more revenue. It’s because our client said,”Fix that problem.” And we think that’s in the public interest.

COMMISSIONER UNGER: So if you don’t have, though, the same individuals providing the auditing services that are providing consulting services, then our proposed rule doesn’t really impact that part of the business, correct?

COMMISSIONER UNGER: So people, even though they’re not currently performing both functions, don’t want to be told that they can’t? Is that what you’re saying?

MR. GARLAND: At Deloitte Touche, we have a large Audit group, Tax group. We have a Consulting group which has a large IT component to it and other components as well. We have an Actuarial group. We have a Valuation group. We have different groups.

Our clients are in a tremendously competitive environment. They’re moving very rapidly. They’re trying to improve themselves, stay up with the competition, and they’re constantly involving and changing at a very fast pace.

The technologies of a year ago, in some cases even a few months ago, are no longer the technologies of today. We need to have people that can keep up with those very rapid developments.

I believe if our consultants, for example, only did audit work, and they believe this as well, they would not be at the leading edge. They would not be keeping up.

And then, when they’re coming in to help us trying to figure out where these systems stable, are they secure, are they state-of-the-art, those kinds of questions, they would have a very difficult time if they’re not doing both over the course of a period of time, let’s say a year. Also, they would be much less interested in staying with us, I believe.

Because the next question I’m going to ask you is what percentage of your revenues are from auditing and what are from consulting?

MR. GARLAND: When they’re brought in — and I’ll just speak for Deloitte Touche. I’ll make a general statement. There may be some exceptions. But when they’re brought in as part of the audit, they are typically billed to the audit account and charged to the client that way.

COMMISSIONER UNGER: When the consultants are brought in on an auditing engagement, are they billed title loans Vermont to theclient as consultants or as part of the audit, or are they separated out?

Now, if, for example, they find some systems problems, flaws and the client asked them to give them advice on how they might fix that, that same professional might switch over and stop charging to the audit process and start charging to a consulting process.

And as far as the percentage of our revenues that are, I’ll call it, non-audit, I think the comments — I was here earlier today — that I had heard I believe made by Chairman Levitt that approximately 30 plus percent of our consolidated revenue are audit related, that would be fairly accurate for our firm.

And many of the people in these other groups, not all, but many of them will consult with clients on consulting types of engagements, but the auditors will also draw them into the audit because of their specialized skill sets and talents

MR. STRANGE: I’m pretty much on the same page as Bob. The way I would characterize it is we’ve got a history in the profession of hiring accounting majors, people whoknow about accounting measurement who come in to these firms and learn how to audit. And that worked well in prior environments.

And what we’ve been trying to — the point we’ve been trying to make here is that the environment we find ourselves in today and what we clearly see in the future is that’s not enough, just people that know about accounting measurement. You have to have other disciplines.

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