Ernst & Young To Set New Trend ?

Ernst & Young are the first of the big professional service firms to act on the implications of the Enron scandal.

In a move that has found great favour in the financial community and is seen as a shrew business move, Nick Land, the UK E & Y chairman, confirmed that the firm will no longer work on internal financial controls for clients for whom it acts as external auditor.

The decision is designed to avoid any possibility of conflict of interest claims where a firm acts in a dual capacity. External Enron auditor Andersen were believed to be making up to $1m per week from the corporate in respect of internal consulting work.

The ethical challenge now laid down by E & Y will no doubt be considered by other major auditors. Although PWC have said that they will not follow the E & Y lead, Deloitte & Touche are believed to be reviewing its position. Andersen are thought to be seriously considering spinning off its' audit business into a separate company. Expect an announcement later this week.