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The Challenge
In 2000, the nation's leading accounting firms and the Securities and Exchange Commission (SEC) were embroiled in a disagreement concerning a proposed rules change that would prohibit accounting firms from offering both auditing and consulting services to clients.
The proposed change to the SEC rules stemmed from a concern that accounting firms offering both services may create a conflict of interest. The conflict, the SEC claimed, could develop while providing auditing services for publicly traded companies and non-audit consulting services for some of the same clients.
Deloitte & Touche, one of the nation's leading professional services firms, led the opposition to this proposed rules change that would force it, and other major accounting firms, to sell its consulting practices. The firm argued that the SEC claim conflicted with conclusions of a panel initiated at the urging of the SEC. In June 2000, the panel had concluded that the auditing profession was sound, Deloitte & Touche noted.
Deloitte & Touche also argued that the SEC's intended course of action would reduce the quality of audits rather than enhance them. Professionals in these consulting practices provide consultative services in complex areas such as information technology, actuarial science and risk management. Given the increasingly diverse and complex nature of businesses and systems that auditors test, accounting firms need this expertise to perform the highest quality audits, according to Deloitte & Touche.
Finally, Deloitte & Touche indicated that once firms sold their consulting practices, they would still need to hire, on an outsourced basis, the same consulting services in order to perform their professional responsibilities. Outsourcing these skills posed the danger of reduced quality control and, ironically, the potential for increased independence problems.
The proposed SEC rule was complex. Other large professional services firms supported the proposed ruling and, earlier, had divested themselves of their consulting subsidiaries. Others, such as Deloitte & Touche, did not support the rule.
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The Franco Strategy
Franco's charge was to draw attention to this issue and the side presented by Deloitte & Touche, in an attempt to forestall the rule. Franco's media-relations efforts reached throughout the Great Lakes Region, which includes Deloitte & Touche offices in Detroit, Ann Arbor, Grand Rapids, Lansing and Midland, Mich., and Cleveland and Akron, Ohio.
Franco began its work by designing a media relations strategy to support Deloitte & Touche's position and bring the issue to the attention of key audiences. A key publication identified was Crain's Detroit Business. Franco presented Deloitte & Touche's side of the issue via communication with the publication's associate publisher/editor, Mary Kramer. Although Kramer was not in full agreement with Deloitte & Touche's position, she agreed to run an opinion piece in the weekly My Voices column by John Bava, cluster managing partner - Great Lakes Region for Deloitte & Touche. Franco drafted the opinion piece on Bava's behalf and secured its placement in Crain's Detroit Business. Shortly afterwards, a letter to the editor was published in Crain's Detroit Business from a business executive who concurred with Bava's opinions on the issue.
Franco moved forward and secured additional placements in several other key business publications in the Great Lakes Region. Bava, in turn, became recognized as a spokesperson in the area on the particular issue, which was an original objective of the media relations strategy.
The Results
The media relations strategy and placements in the Great Lakes Region were so impactful that they were recognized by the national office of Deloitte & Touche as one of the most successful campaigns across the country.
The SEC ruling came shortly after the November 2000 election and resulted in a compromise of the initial proposed rule. Accounting firms can still offer both consulting and auditing services to their clients, but now must be more open about disclosing the nature of financial agreements of any client when representing both services.
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