After the big accounting scandals, small is looking better

By IRENE CHAPPLE

Distrust of large accounting firms after a rash of overseas corporate frauds seems to be driving customers into the arms of smaller operators.

Almost 40 per cent of New Zealand managers say they will consider turning to smaller firms for their auditing requirements because their confidence has been shaken by overseas accounting scandals.

The comments were made in a nine-country survey by Robert Half Finance and Accounting.

In New Zealand, 57 per cent of managers said they still sent work to large firms.

But 39 per cent said they would consider using smaller firms or interim specialists for their audit needs.

Reasons given include a lack of confidence in the larger firms, and a desire for a more personal relationship.

The research comes after more than a year of corporate accounting embarrassments, started by the collapse of United States energy giant Enron.

Enron's auditor, Andersen, was found to have shredded documents related to the audit, and both companies are embroiled in lawsuits over their behaviour.

Kim Smith, New Zealand manager of Robert Half Finance and Accounting, said the number of interim specialists had increased as larger companies downsized or restructured.

"Companies now have have the opportunity to bring in these independent professionals to review financial policy and corporate governance - which may mean greater transparency and therefore more satisfied shareholders."

She said New Zealand had been insulated from the overseas scandals, but interim consultancy providers were being used more often.

She had also noticed an increase in companies "spreading the wealth".

Staples Rodway partner Denis Drumm has also noticed a trend toward smaller firms.

But he believes it may be caused more by a desire for more personal relationships than distrust of the larger firms.

"Clients are re-assessing their relationships. It has probably made them look around.""