Call me incredulous, but the Big 4’s public relations professionals may be on to something. Set the bar low, tell us what the Big 4 can’t do, won’t do, want to make you believe they have no responsibility to do, and maybe everyone will leave them alone. Then they can go back to making money the old fashioned way – via a government-sanctioned oligopoly.
It’s a trend that started with the “We were duped” defense, used most recently by PwC in its initial reaction to the Satyam scandal. PwC then piled on to the pity party when, in a rambling, incoherent interview with an Indian journalist a couple of weeks ago, Global Chairman Dennis Nally stated:
“Many times there is an expectation from the investor community that the auditor is in fact fully responsible for the detection of fraud. Now that is not our job, today.”
Gee, Dennis…Have you guys ever heard of SAS 99?
“SAS no. 99 reminds auditors they need to overcome some natural tendencies—such as overreliance on client representations—and biases and approach the audit with a skeptical attitude and questioning mind. Also essential: The auditor must set aside past relationships and not assume that all clients are honest.”
“…there are limits to what an auditor can detect – and those limits often fall far short of what investors expect from the process. “We’ve always had this expectation gap between what the auditor really can do and what the investing public wants the auditor to do, or wants the audit to represent,” he said
And the reporter lapped it up with no critique.
Unfortunately, I was drinking coffee and eating a biscotti when I read that quote. There’s so much arrogance, misinformation, and PR speak here. The shock and awe choked me up, sending raisins, almonds, and a mouthful of latte towards my MacBook Pro.
Deloitte is defending itself against several lawsuits, including their own version of the global network challenge related to the Parmalat fraud, as well as experiencing declining revenues and loss of clients for the first time in several years. Just this week, United Airlines dumped Deloitte as the auditor for EY. Of the Big 4, Deloitte lost the most business from the “crisis.” Several of their audit clients and consulting clients failed or were acquired. They were screwed from both directions.
Deloitte has terminated thousands during the last eighteen months, including firing or demoting partners. This blog, re: the Auditors, gets thousands of comments, mostly negative, criticizing their miserable handling of staffing issues.
How you gonna ‘splain that, Lucy?
The most disingenuous, double-talking part of the Globe and Mail interview is when Parrett says,
“I don’t think there was an economic windfall for the firms,” he said. “On balance, I wish we could all have forgotten about the last five years because it’s been negative for everybody.”
Really? Record revenues and record partner payouts since 2002 as a result of Sarbanes-Oxley have been a negative?
Well…Fasten your seat belts Big 4. There’s a bumpy ride in store for you in the next five years.
If you last that long.
This article was originally published at GoingConcern.com on August 9, 2009.