The future of corporate reporting: from the top (continued).

• Author: Heffes, Ellen M.
• Position: FinancialReporting

With "tone at the top" a key to the new accounting and auditing standards stemming from The Sarbanes-Oxley Act and Public Company Accounting Oversight Board (PCAOB), Financial Executive, in a follow-up feature, went again to the top. Here, Managing Editor Ellen M. Heffes, who last year interviewed the U.S. CEOs of the five largest accounting firms, asks the same two questions of the CEOs. The following is how each responded to one question; for the second question, see Financial Executive's Web site: www.fei.orglmaglarticles/3-2004_fr.cfm.

A much-discussed topic is market dominance of the Big Four. Capable of auditing about 97 percent of the world's largest companies, they wield enormous power, which has increased with Andersen's demise. What is your firm doing to balance that power with serving the public interest? And how do you respond to press reports that indict the profession for "lapses in integrity and competence?" Is the workload--and resulting strained resources--an unintended consequence of the market dominance?

Samuel A. DiPiazza, Global CEO, PricewaterhouseCoopers: The four firms are very competitive in nature and positioning, and I see no reduction in the intensity. I think if you ask each of the Big Four CEOs, all would say, "We would prefer there would be five firms; none of us wanted to see Andersen collapse."

The reason we went from eight to a smaller number was to create more quality and coverage for multinational clients. With the top four or five hundred clients of this firm operating in 60-80 different countries, we need broad skills and depth in very different places. Our responsibility in our audit practice--our largest and brand-defining business--is to serve the public by bringing integrity to the process of auditing. We understand that's what we do, so never does our size or our market position get in the way of that. I think clients with the four firms are finding a way to allocate their work and avoid conflicts.

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All four of us are--and I know PwC is--very focused on who we do [business] with. The number of clients that we have voluntarily walked away from--because we do not believe that they have the commitment to governance or controls, or if their business model is sustainable--is creating a vacuum. What concerns me is that the highest-risk clients/companies might find themselves without an alternative, and we've got to find a way to deal with that. The litigation environment makes it very hard for us to accept an unreasonable level of risk. There are a lot of resignations going on today among the Big Four, and it's happening for reasons that, frankly, we believe, a lot of regulators don't understand--most...