I’ve received several copies of the press release below in the last day or so. Given all the concern regarding asset pricing, especially of non-marketable securities, complex derivatives and other exchange traded and OTC products, I found this announcement refreshing and scary at the same time.
It’s refreshing if the firms are reviewing and vetting sophisticated tools, the same ones their clients are using (?) to be better at this.
The press release is scary because it refers to KPMG Turkey.
Is Turkey the hotbed of companies and financial services firms with these assets on their balance sheets? What about London, New York, or Frankfurt?
Finally, there is the question of alliances and other marketing and promotion of an audit firm’s vendor. This company looks to be private, but it’s hard to tell.
Whose responsibility is it to investigate these and other issues?
Accounting firm KPMG’s Turkey operation has chosen SuperDerivatives’ multi-asset options pricing and analytics platform for foreign currencies and interest rates. The firm will use the platform to verify its audit clients’ portfolios.
KPMG Turkey has joined the other ‘Big 4’ accounting firms (Blogger note: Which ones???????) in standardising portfolios using the platform.
The platform will allow KPMG auditors to ensure their clients adhere to accounting standards such as FAS 161, which is to be introduced in the near future to ensure that derivatives are priced at the fair market value.
“Both external auditors and internal risk controllers find that given the recent financial crisis and increasingly stringent reporting regulations, they demand precise, market-relevant valuation and risk analysis tools,” said Ed Crouch, head of corporate development and strategy for SuperDerivatives. “Determining the correct price of derivatives can only be achieved with well chosen, verified market data, in conjunction with a scientifically sound model and continuous calibration to the actual traded market.”