There were some very thoughtful comments to my post on Friday regarding the firms and their “global networks.”
A couple of questions for my commenters:
@Final Four Guy – I actually agree with your comments on this complex topic. But am curious where you think my comments are off base. As far as the law firms go, I think they are as exposed as the audit firms to the issues of the day such as securities fraud and aiding and abetting. Take a look at the fate of Jenkins and Gilchrist versus KPMG on the tax shelter case or Mayer Brown and Refco. The difference with the law firms is that they don’t whine about their mistakes and potential liabilities. They take their punishment like a man or vigorously defend themselves including going to trial, unlike the chicken liver audit firms.
@Anonymous – In reference to the comment from the person who works with a seamless global engagement, can you tell us which firm this is? I’ll give compliments if at all possible when something works. However my experience at both KPMG and PwC was much less than that. And the comments I heard at the PCAOB meeting were more focused on liability than on cooperation.
Finally, I got a nice note from Prem Sikka over the weekend pointing me to some research he had done previously on the issue. Thanks Prem. It is always nice to see my experiences and instincts backed up by academic research and empirical evidence.
“I looked at these issues some time ago. See Chapter 6 of the linked to document. I picked some cases which considered the statutory regulators (in this case the Bank of England), local professional bodies or the international agencies… In each case, the firms used the global network’ argument as a strategy to frustrate inquiries.”