Legal and Accounting Network

In the 1990s, large accounting firms reached another ceiling on the services they provided to their clients. After reaching their natural growth threshold with more than 90% audit for publicly traded companies, the Big 6 have diversified into multidisciplinary legal, technology and employment services. Given that the critical infrastructure was in place, it was considered relatively easy to integrate other services into the existing network. As a network, it was natural to create independent entities in these other professions that could themselves be part of the network. The method and structures varied from company to company. When the Big 6 began its expansion into the legal profession, it faced fierce opposition from law firms and bar associations. Commissions, bodies and committees have been set up by law and audit firms to defend their positions. Government agencies have been recruited. For more than five years, the debate has intensified. This movement came to an abrupt end with the fall of Arthur Andersen as a result of his association with Enron. Sarbanes Oxley followed, ending this trend. [ref. needed] Some international associations of independent law firms, such as the Alliott Group, now accept law firms.

The largest accounting networks adopted trade names that each member used. The names of the original companies that were part of the networks were lost and replaced with trade names. There was a perception that these networks were more than networks, but individual units and not completely independent enterprises. That has never been the case. The result was that the Big Eight concept was established, which separated the eight firms from all other accounting firms. Accounting networks have been created to meet a specific need. “The accounting profession in the United States was built on a government-established monopoly on auditing.” [3] Accounting networks arose from the need for publicly traded US companies to audit the financial statements of the Securities and Exchange Commission (SEC). [4] For more than 70 years, the SEC has continuously sought better coordination and consistent audit quality worldwide.

Networks were the logic model to meet these requirements. They expanded outside the U.S. because financial results had to be audited wherever a company did business. In the United States, regulations of the Public Company Accounting Oversight Board (PCAOB) require the inspection of companies outside the United States. Without a network of common standards and internal means of communication, it would not be possible to carry out the necessary audits. With these factors at play, some networks have continued to grow; Others remained in stasis. Individual members of the networks began to offer other accounting-related services. These services included forensic accounting, business valuation, benefits planning, strategic planning and almost everything related to the financial aspects of the client`s business. The structure of the network has facilitated the reception of these services and their geographical scope.

[7] An accounting network or accounting association is a network of professional services whose primary purpose is to provide resources to members to support clients around the world, thereby reducing uncertainty by bringing together more resources to work on an issue. Networks and associations work independently of independent members. The largest accounting networks are known as the Big Four. Think of The Financial & Legal Network as an extension of your accounting and legal services, without the risks, costs and headaches associated with staffing. Because today`s business and financial markets are so competitive and overhead costs are high, our group allows you to spend less time and pay on your business. The mission of our professional services group is to be “Move Business Forward” and provide our clients with a single source for all their accounting, legal, personal and business needs. Vicarious liability issues are transferred to the corporation. In the EU, rules have been adopted requiring “networks” to define whether they are “associations” of independent companies or more operationally and financially integrated networks. [19] Additional standards have been adopted by the International Federation of Accountants, an independent organization representing the accounting industry, to distinguish between networks and associations.

Everyone`s goals are to provide customers with a certain level of understanding of the degree of integration with each other. Examples of international associations of accounting firms include Alliott Group, Geneva Group International and Leading Edge Alliance. Networks also reflect customers` needs for seamless global services, as they are more efficient and cost-effective. [6] From an auditor`s perspective, a globally regulated organization with consistently applied standards has significantly reduced risk. However, network expansion can increase the risks of legal liability and unresolved quality control issues. Self-definition as a network or associations can determine whether there is a conflict of interest. [21] If the group is perceived as a network, it may be excluded from client representation because it cannot represent a competitor. Members of the association would not be excluded from representation because companies are perceived by clients as independent. Another factor in the development of accounting networks has been the ban on advertising by the American Institute of Certified Public Accountants (AICPA). While larger companies advertised their services indirectly, smaller companies followed the rules and considered advertising unprofessional.