New York (April 8, 2003) - Shakeups continue at Deloitte Consulting as long-time client General Motors dismissed the firm as its consultant shortly after parent company Deloitte Touche Tohmatsu canceled plans to spin off the unit.
Last week Deloitte abandoned its sales plans after the management team failed to obtain adequate financing to fund the deal. Shortly thereafter, Deloitte Consulting announced chief executive Douglas McCracken will retire in June. The firm is reportedly looking for McCracken’s replacement and expects to name a new CEO in a matter of weeks, though GM said the move had little bearing on its decision.
In March, General Motors decided to award no new business to Deloitte Consulting because there had been a delay in their spin off,” said GM spokesman Jeff Dubrowski. “The news that they were not going to separate [the consulting unit] made it easier for us to see what remaining [consulting] projects could be terminated.”
Dubrowski also said GM plans to retain Deloitte as its auditor, though ultimately the decision is up for shareholder approval at the company’s annual meeting in June. He also confirmed reports that GM paid Deloitte $102 million in 2001 (the latest year for which figures are available), of which only $21 million was for audit work.A Deloitte spokeswoman declined to comment on GM’s decision apart from saying the move “is disappointing but not unexpected.”
The big four accounting firm had reluctantly agreed to spin off Deloitte Consulting last year after the Enron-Andersen debacle sparked an outcry against accountants providing consulting services to their clients. The initial timetable for the split and re-branding of the consulting arm as 'Braxton' was announced early last year, but had already slipped from September 2002 to the end of last month.
In a related move, top U.S. car dealer chain AutoNation Inc. said it would begin searching for a new independent auditor as plans for Deloitte's consulting arm spinoff had hit a snag. Unlike GM, AutoNation will still use Deloitte Consulting but is dropping its auditing service to comply with Sarbanes-Oxley rules.
-- Seth Fineberg
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