Re: The Auditors Is One Year Old

A year ago October 11, I posted my first entry in this blog. I was barely a week out of PwC and needed a vehicle for the energy and the content that had gone unused during my tenure there. Over the years, I not only have formed some very strong opinions but I’ve also written a lot of presentations and whitepapers, given a lot of speeches and conducted more than my share of training sessions. Without the infrastructure of a large firm, I had to find a way to maintain the discipline of keeping current on new issues and of utilizing my interests and opinions in a productive way.

The idea of writing a book had been there for a long time. But while working for others, I found it impossible to write the book or speak the thoughts I was really feeling. The topics of my writing range from the changes in my profession, the complexity of the financial markets, the impact of globalization on investors, to the challenge of working in business while remaining a thinking, feeling, compassionate human being.

I’m writing a book about the Big 4 audit firms because I believe they are an underexamined business model and one most investors take for granted at their peril. We expect integrity and objectivity in the financial information we use. Public ownership of corporations only works if every investor, big and small, as well as employees, customers, vendors and other stakeholders do not each have to demand to review the books and do the due diligence that investors in private entities must do. In order to make that leap of faith, we count on the public accounting firm, and now their regulators, to provide assurance that publicly available financial information gives a true and fair picture of the operations and results of the business.

Unfortunately, the audit firms and, in particular, the Big 4 have failed miserably at living up to the public trust that has been vested in them by the investor public and our elected officials.

Alternatives to the curent model for assuring the objectivity and integrity of published financial information must be discussed. A real solution must be found.

You are reading this blog because you seek to know how these firms really work, to understand the conflicts and inherent pressure that they are now under in the age of globalization and government regulation. You seek to understand the reasons why your investment, your employer, your customer, or your vendor “suddenly” collapses in scandal or bankruptcy without warning from the firms charged with seeing through the games that self-serving executives will play. You seek to learn more about the interconnectivity between the firms, their clients, and the other players in the financial markets – the regulators, the rating agencies, the lawyers, the consultants, the bankers and the politicians. Finally, you seek to enlarge your perspective in an entertaining, surprising and, sometimes, unpredictable way. I hope to meet all of these expectations.

I am in Monterrey, Mexico this week with a client and just returned from viewing an exhibition at the Museo de Arte Contemporaneo of the work of Julio Galan. An example of his work is above. I also listened to a lecture by the poet and translator Jose Luis Rivas entitled, Entre la Traducción y la Creación (Between Translation and Creation). I have used my work and my writing to expand my world view and make my life richer. I encourage you to do the same.

I leave you with my translation of a poem by Mario Benedetti about an accountant.

The Paycheck

That hope that fits in a thimble,
That high path in the mud,
That twists and turns like a dream,
That prediction of an infinite trip
And the infinite trip with goodbyes and people
And snow country and hearts
Where each mile reveals a different sky.
That confidence from I don’t know when,
That oath until I don’t know where,
That crusade towards I don’t know what,
That which one may be able to be,
With different rhythms and a lucky break,
In the end, to say it one last time…
That hope that fits in a thimble,
Evidently does not fit in this envelope,
With dirty papers from so many dirty hands,
What they pay me, of course, each twenty-ninth
For having the books signed and sealed
And for leaving my life behind
To dribble away
Like dirty motor oil.

SUELDO
Aquella esperanza que cabía en un dedal,
aquella alta vereda junto al barro,
aquel ir y venir del sueño,
aquel horóscopo de un larguísimo viaje
y el larguísimo viaje con adioses y gente
y países de nieve y corazones
donde cada kilómetro es un cielo distinto,
aquella confianza desde nos cuándo,
aquel juramento hasta nos dónde,
aquella cruzado hacia nos qué,
ese aquel que uno hubiera podido ser
con otro ritmo y alguna lotería,
en fin, para decirlo de una vez por todas,
aquella esperanza que cabía en un dedal
evidentemente no cabe en este sobre
con sucios papeles de tantas manos sucias
que me pagan, el lógico, en cada veintinueve
por tener los libros rubricados al día
y dejar que la vida transcurra,
gotee simplemente
como un aceite rancio.