Ernst & Young has turned down about 25 per cent of potential clients in recent years to prevent the accounting firm being drawn into possible scandals, according to newly elected chairman for Greater China David Sun Tak-kei.
The firm also resigned as auditor to scores of existing clients last year, including at least 10 listed companies, mainly due to non-agreement on fees.
In many cases, Mr Sun said the resignations were prompted after Ernst & Young had found areas in accounts that needed more work, which would have led to higher fees that the companies disputed.
'We all want to have more business but we have to assess the risks involved,' Mr Sun said in his first media briefing since being elected by fellow partners to succeed Anthony Wu Ting-yuk, who retires at the end of this year. Mr Sun's term as chairman will begin in January next year.
'After the accounting scandals at Enron in the US, all accounting firms have been more concerned about risk management. Ernst & Young has been very selective in choosing our clients as part of our risk-management measures. In the Greater China region, we have turned down one in four potential clients in the last few years.'
He said the firm would accept the job as auditor only with companies which had sound management, good internal controls and high growth potential.
