Deloitte Considers Turning Itself Into Single PartnershipFinancial Times
Published: December 13 2005 02:00 | Last updated: December 13 2005 02:00
By Andrew Parker in New York
The head of Deloitte, the world’s second biggest accounting firm, has predicted it could transform itself into a single global partnership during the next 10 years. William Parrett, global chief executive of Deloitte, said regulators were likely to push the top accounting firms into becoming single partnerships, and that clients and investors might support what would be an enormous change to existing structures. Deloitte will tomorrow publish its strategy for the next decade. It will warn its partners to be prepared to adopt new business structures. If the big accounting firms were to become single global partnerships, their leaders would be able to exercise greater authority to drive up standards of audit work. However, laws in many countries prohibit accounting firms from organising themselves as single partnerships. Instead, the firms consist of networks of member partnerships that are formed in the countries in which they operate.
The partnerships enjoy considerable autonomy. Regulators are increasingly questioning whether the federation-style structures can deliver consistent audit work across countries. Mr Parrett, chief executive of Deloitte Touche Tohmatsu, the firm’s global umbrella organisation, said: “My expectation, both from a business standpoint and a regulatory standpoint, is larger firms will evolve to a global partnership over the next decade.” Deloitte’s 10-year strategy plan says its vision is “to be the standard of excellence”, and will involve raising audit quality. The strategy says the interests of Deloitte’s member partnerships are best served by its existing structure, and Mr Parrett said the structure should not impede efforts to improve the quality of the firm’s services. But he added: “One could argue it is harder to do it in this structure, and therefore more costly.” The strategy involves scenario planning for potential changes confronting Deloitte during the next decade, including the possibility that regulators will push the big firms into becoming single global partnerships. Mr Parrett said one condition for this would be liability reform in certain countries to prevent catastrophic legal claims against firms. Deloitte’s annual report, to be released tomorrow, says its global revenues increased 10.9 per cent to $18.2bn (œ10.4bn) in the fiscal year ending May 31 2005 . Audit revenues rose 17 per cent to $8.7bn.