The discussion about the role of auditors during the financial crisis is much farther along in the UK and EU than in the US.
We are just getting started here. The House of Lords just issued a report on the auditors. The report gets an A for effort, in spite of recycling time-worn, repeatedly denounced lame reforms. At least they started talking about the issues over a year ago.
The issue is more acute in Ireland – and Iceland – not only because the fiscal pain is greater and more imminent but because the ability to disperse that pain is so much less than in the United States. Here many have an attitude that if you didn’t feel it it didn’t happen. Some even make excuses for fraud.
That strategy is no longer working since so many here are still not working and almost everyone I know has a mortgage fraud, foreclosure, appraiser, or servicer nightmare story to tell at parties.
It may be that the quote The Sunday Times chose, based on an hour on the phone and several articles I sent, is common sense. Unfortunately, after four years and 1,000 posts on this site, the idea that auditors have structural disincentives to do the right thing is just starting to stick.
It may be that real accounting industry reforms will come this time. More likely than not they will not.
But you can count on one thing. I will keep talking and writing about the need for those reforms.
The Sunday Times is behind a paywall but you can read the whole thing with a day pass for £1.
“Audit fees are huge and relationships are often very long,” pointed out Francine McKenna, a long-time critic of E&Y, KPMG, PWC and Deloitte — the “Big Four” — through her blog Retheauditors.com. “There is an enormous motivation for them to maintain the relationship at any cost.”