What I don’t understand are the derisory fines the Big Four are charged for their often shoddy work. Stakeholders in many companies, be they shareholders, creditors, employees and the Inland Revenue, have suddenly sustained enormous financial losses because the auditors failed in their duty to undertake a thorough audit of the company.
This is often blamed on the auditors’ more remunerative financial links with the company (e.g. consultancy work). This conflict of interest should simply be banned. But in the case of EY and Wirecard I find it amazing that EY allegedly never sought sight of the bank accounts to verify the existence of the missing money!
Whilst everyone else loses money hand over fist, the auditors have hitherto received a slap on the wrists and a inconsequential fine. In every other case where professionals are found to have been at fault they are forced to pay full reparations to those who have been adversely affected by incompetence and/or fraud.
So the question I ask is why are auditors not held fully accountable to those who suffer financial loss as a result of their clear and obvious failings?
Back in the late 70’s/ 80’s the firms realized there was money in consulting, and usually the other parts of the firms could work with consulting and still maintain decent independence. There definitely is a market for their services and since they often already understand that business it is efficient to use the firm for consulting. One of the Big Eight firms was called in to help save Chrysler back in 1979.
But they started pushing the accountants to be sales people, along with still making sure the audit objectives were met, even though the accountants didn’t always like it. I’ve heard of partners who were very good auditors, but were booted because they didn’t cross sell enough to the consulting side. At least one of the former ‘Big EIght’ firms that are now the big four firms pretty much had to be merged or they might have gone under.
Sometimes the consulting and non consulting sides of the firms don’t get along real well, for various reasons.
Fully agree fines are irrelevant: maybe suspending the audit partner (with no benefits) would concentrate the mind?
What we don’t see is the size of the insurance claims made against these firms. It is many years since I was aware of what they buy globally (as opposed to the local in-fill layers), but even then it was huge, with enormous retentions. I’m sure the Wirecard D&O limit won’t be big enough to recompense shareholders, so EY will be dragged in there.
Also fascinating to see what happens to BaFin? failure to disclose for over a year?
Man made Fines are irrelevant and even suspension is irrelevant too. I am seeing world market is going to collapse sooner than i previously thought.
The auditors from the accounting firms should be held responsible for all the “Chaos” in the IT world especially among the Top 10 IT giants. Their business is all unlawful, fraud in nature. Similar to Enron, i am considering all the Top 10 IT companies including Microsoft, Apple, Google, Facebook, Twitter gonna collapse. There is none in the world to challenge the statuesque as i am taking the stand on this front.
As the world market is gonna collapse sooner, the people who work or worked in these respective accounting companies will NOT be employable in any part of the world due to their work ethics, Culture, data breech and zero quality in their audit work.
What I don’t understand are the derisory fines the Big Four are charged for their often shoddy work. Stakeholders in many companies, be they shareholders, creditors, employees and the Inland Revenue, have suddenly sustained enormous financial losses because the auditors failed in their duty to undertake a thorough audit of the company.
This is often blamed on the auditors’ more remunerative financial links with the company (e.g. consultancy work). This conflict of interest should simply be banned. But in the case of EY and Wirecard I find it amazing that EY allegedly never sought sight of the bank accounts to verify the existence of the missing money!
Whilst everyone else loses money hand over fist, the auditors have hitherto received a slap on the wrists and a inconsequential fine. In every other case where professionals are found to have been at fault they are forced to pay full reparations to those who have been adversely affected by incompetence and/or fraud.
So the question I ask is why are auditors not held fully accountable to those who suffer financial loss as a result of their clear and obvious failings?
Back in the late 70’s/ 80’s the firms realized there was money in consulting, and usually the other parts of the firms could work with consulting and still maintain decent independence. There definitely is a market for their services and since they often already understand that business it is efficient to use the firm for consulting. One of the Big Eight firms was called in to help save Chrysler back in 1979.
But they started pushing the accountants to be sales people, along with still making sure the audit objectives were met, even though the accountants didn’t always like it. I’ve heard of partners who were very good auditors, but were booted because they didn’t cross sell enough to the consulting side. At least one of the former ‘Big EIght’ firms that are now the big four firms pretty much had to be merged or they might have gone under.
Sometimes the consulting and non consulting sides of the firms don’t get along real well, for various reasons.
Fully agree fines are irrelevant: maybe suspending the audit partner (with no benefits) would concentrate the mind?
What we don’t see is the size of the insurance claims made against these firms. It is many years since I was aware of what they buy globally (as opposed to the local in-fill layers), but even then it was huge, with enormous retentions. I’m sure the Wirecard D&O limit won’t be big enough to recompense shareholders, so EY will be dragged in there.
Also fascinating to see what happens to BaFin? failure to disclose for over a year?
Man made Fines are irrelevant and even suspension is irrelevant too. I am seeing world market is going to collapse sooner than i previously thought.
The auditors from the accounting firms should be held responsible for all the “Chaos” in the IT world especially among the Top 10 IT giants. Their business is all unlawful, fraud in nature. Similar to Enron, i am considering all the Top 10 IT companies including Microsoft, Apple, Google, Facebook, Twitter gonna collapse. There is none in the world to challenge the statuesque as i am taking the stand on this front.
As the world market is gonna collapse sooner, the people who work or worked in these respective accounting companies will NOT be employable in any part of the world due to their work ethics, Culture, data breech and zero quality in their audit work.