My Top Twenty Favorites From 2012

  1. January 2, 2012, How Do You Hide A Multibillion Dollar Loss? Accounting For The Olympus Fraud

One of my most popular posts in 2012 was one written by someone else. This is the best explanation, still, of what happened in Japan at Olympus.

2.  January 26, 2012, KPMG Nixes GE Loaned Tax Staff Engagement

I started the year with a big win. An earlier exposé of a significant auditor independence violation was vindicated. The engagement stopped, not with a bang, but there were probably plenty of whimpers at KPMG.

3.  February 22, 2012, Are Auditors Reporting Fraud And Illegal Acts? The SEC Knows But Isn’t Telling

I am very proud of this piece. It’s the result of a Freedom of Information Act request I made to the SEC. Academics, regulators, lawyers and the audit firms reference it frequently.

4.  April 7, 2012, Groupon: You Must Have Fallen From The Sky

Another very popular post. It’s a favorite of mine as much for the music I chose to accompany it as for the writing. Groupon is now just about all over but the shouting.

5.  June 15, 2012, Not Much Illumination: JP Morgan, MF Global & Man in the Middle, Jamie Dimon

This post sums up the status of the MF Global fraud investigation at midyear. When we hit the one-year anniversary, October 31, 2012, we didn’t know much more. I’ve been told there’s a cover-up and certainly there are still no criminal indictments. Time will tell…

6.  June 19, 2012, Big Four Auditors and Jury Trials: Not In The U.S

I get a lot of requests to explain the rhetorical contradiction between what industry critics like me say about audit firms failing their duty to shareholders with impunity and those who insist auditors need liability caps to stem the threat of catastrophic litigation. This is my attempt to illuminate that debate.

7.  July 9, 2012, What The SEC And PCAOB Fail To Acknowledge About Chinese Fraud

The Chinese reverse merger fraud story goes on and on and on. But there’s more to the story. It includes fraud outside of China that’s being ignored and regulatory impotence that extends beyond the relationship between the SEC and PCAOB and the country behind the Great Wall.

8.  July 23, 2012, Huron Consulting, Its Executives and PwC; All’s Well That Ends Well

They say it’s not over until it’s over but this story ended well for PwC and Huron CEO Gary Holdren. Chalk that up to expedient lawyering.

9.  August 5, 2012, More Sarbanes-Oxley Anniversary Thoughts

The Sarbanes-Oxley Act of 2002 was ten years old in 2012. I wrote an Op-Ed for the Financial Times on the subject. Here’s a post with a link to that piece and more thoughts.

10.  August 28, 2012, Ding Dong: Dan Ustian Out At Navistar

This story, one I’ve followed since I began writing this blog six years ago, has finally started to end.  The last chapter? Navistar will be acquired for a song or files Chapter 11 in 2013.

11.  August 30, 2012, Four Years After Madoff, Audits and Auditors of Broker-Dealers Still Lousy

No one made a dent in this problem this year and more failures – and breaches of customer segregated funds such as we saw at Sentinel, MF Global and PFGBest – are coming.

12.  September 17, 2012, The Bailout of AIG: Mission Accomplished?

The rancorous politics of the financial crisis bailouts cloud the true evaluation of the tactics used to get to where we are now. It’s a chicken fight that impedes proper planning for the next crisis.

13.  October 8, 2012, Casino Industry Suffering From China Denial Syndrome

An example of how diversionary tactics work. Look over there at those little Chinese companies! All the while supposedly native companies pretend to be American exchange listings while generating substantial revenue outside the jurisdiction or control of U.S. regulators.

14.  October 22, 2012, A Summary of Writing on the “Independent” Foreclosure Reviews and the AG Mortgage Settlement

It looks like I was right all along. The New York Times announced on December 31st that the OCC and Federal Reserve Bank will most likely scrap the “independent” foreclosure reviews in exchange for a modest settlement from the same fourteen banks. It’s yet to be defined how borrowers will ever get any of the money. Just like the last time. This post summarizes all my writing on the subject – how it happened and how the Big Four audit firms, acting as consultants, got paid billions while borrowers who were harmed still languish.

15.  November 13, 2012, FDIC Piles On To PwC For Colonial Bank Failure

PwC has the dubious honor of being the first audit firm sued by the FDIC for a crisis-era banking failure. This is a messy case. I’m looking forward to the trial. (Wake me up when that starts.)

16.  November 18, 2012, My Big Fat Overrated CEO: McKenna On Dimon On The Keiser Report

I did a lot of speeches and media in 2012. The Keiser Report is very supportive of my work and loves when I talk about Jamie Dimon. This post sums up all the reasons – including fallout for MF Global – I predicted in January of 2012 that Dimon would be out of a job by now. That American Banker column is one of BankThink’s most popular of 2012.

17.  December 1, 2012, Deloitte, HP And Autonomy: You Lose Some But You Win Some More, Much More

Big, big story at the end of 2012 that involves all four of the Big Four audit firms and is a prime example of the growing influence  – and the threat to auditor independence – of the reestablished consulting practices in the firms.

18.  December 7, 2012, Deutsche Bank Fair Value Fakeout Didn’t Prevent Backdoor Fed Bailout

Just when you think the year is winding up, we get another scandal. There’s more to this story from the auditor – KPMG – angle. I’ll be writing about that soon, and why this is another example of the “Great American Financial Sandwich”.

19.  December 19, 2012, Getco Acquires Knight Capital: No Auditor Was Harmed In The Process

I can write stories like this in my sleep, they are so predictable. I could have given it the title, “PwC Always Wins!”

20.  December 26, 2012, PwC and Thomson Reuters: Too Close For Comfort

I started the year with an auditor independence exposé and was lucky enough to fall into an even bigger violation of auditor independence regulations to close the year. This one is so brazen, so stupid, and probably so common, I’m not sure how the SEC will force its unwinding and still ignore the fact that I had to tell them about it. Will there be a sanction or a fine this time, unlike the quiet end to the KPMG/GE violation? I hope I’m still alive to see it.

4 replies
  1. Anon
    Anon says:

    Pity you missed the Kid Digital sacking of GT and announcement of forthcoming restatements.

    Then again, shouldn’t be surprized. Minimal 2nd tier commentary generally in media. they do seem to get away with lower compliance and risk costs, lower quality expectations and ultimately make higher gross profit margins. And they complain they want more audit share… Not sure why, more risk, more scrutinity, more overhead, less profit margins. Whilst the top partner profits are lower than big 4, the averages really are not that different.

    The biggest risk to 2nd tier business models is that the Big 4 screw up the regulatory model for them. Or worse, they get what they ask for (more share) and screw it up even more themselves.

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