By James Langton

(November 13 – 11:10 ET) – The Financial Times is reporting this morning that the Securities and Exchange Commission in the United States will make “significant concessions” to the Big Five accounting firms when it announces its new rules for auditor independence on Wednesday.

The newspaper says the most important change will see the SEC back down from its demands that firms split their accounting and consulting divisions.

By coincidence this morning Hewlett-Packard announced that it has ended talks to acquire the consulting division of PricewaterhouseCoopers, a deal tipped to go at about US$18 billion. Price is being touted as the reason, although news of the SEC’s backtracking may have had a hand in the decision, too. Ernst & Young has already sold its division and KPMG is said to be doing so as well.

FT reports that there is still a question whether firms will be able to continue lucrative information technology consulting. “The firms have lobbied the SEC hard to allow them to continue to offer IT consultancy that relates to systems that underpin financial statements,” it says. “People close to the discussions say the SEC has yet to make up its mind whether to allow this work. Much depends on whether the firms bend on other issues before Wednesday.”

The SEC also wants the majority of members on the profession’s 16-member ethics committee to be public members, while the accountants are pushing for some slack on affiliations between firms and their clients.