Auditing firms try to have a global brand without the global responsibility

Business Week - Audit Firms' Global Ambitions Come Home to Roost

A recent US District Court of Southern District of New York wrote in a ruling that accounting firm DTT could be held liable in a shareholder suit filed against one of their 'loose affiliates' that operated in Italy and audited a dairy corporation Parmalat. This company hid money and losses and the prosecutors allege that they did so with the assistance of DTT's child, Deloitte Italy. The ruling stated that despite the disclaimers, fine print, and claims of independent ownership of each firm in each country, the parent firm offered 'seamless service across national boundaries', which can only be accomplished through affiliate organizations. The parent organization gets its financial support from its 'affiliates' and gives quality control, dispute resolution, and joint marketing. The auditing firms want to offer global services but without the up-line liability. This ruling, while not binding on other judges, could significantly alter the way the big public auditing firms do business.