On September 24, 2009 the Public Company Accounting Oversight Board issued a report on the first year of implementation of Auditing Standard No. 5. There’s something negative to say about each of the components reviewed.
I’ve been following the trials and tribulations of the mortgage originators and their auditors for a while. I wrote about American Home Mortgage and Deloitte for the first time in August of 2007.
It seems so much of the time I spend on the blog – reviewing material, discussing the firms with others, analyzing the strategic choices they’ve made – is spent on lawyers and litigation. Jim Peterson wrote a follow-up post yesterday with his thoughts on the Mid Year Review of Securities Litigation webcast and our phone conversation over the weekend.
We agreed, at least, on this: Failure of another big audit firm is the elephant in the room.
Last Thursday I participated in the “2009 Mid-Year Review – Securities Litigation and Enforcement” sponsored by Securities Docket. The webcast is part of BrightTalk’s Securities Litigation Summit, and follows-up and provides an update to the popular “2008 Year in Review” we presented in January 2009. I joined several of the leading bloggers in the securities […]
Update: June 18, 2009 The jury found that BDO International bore no responsibility for the $170 million compensatory damages verdict against BDO Seidman followed Tuesday’s directed verdict for BDO International, which cleared the international of liability for $351 million in punitive damages against BDO Seidman.
…But the fact still remains: BDO Seidman is currently responsible for both the $170 million and the the $352 million dollar punitive damages unless reversed on appeal. What to do about BDO Seidman and the US firm, especially if the judgement is upheld and the US firm can’t pay?
After a week’s delay, the Banco Espirito Santo (aka ES Bankest ) vs. BDO International trial finally started in Miami on June 2. I was approached by Courtroom View Network and given access to the full trial tapes and select clips in exchange for this mention.
I’ve been following Stephen Thomas of Thomas Alexander & Forrester in the BDO International case and in his new initiative regarding KPMG International and New Century. He’s on a roll. And I personally believe he’s got a slam dunk case against BDO International.
The Banco Espirito v BDO International trial is scheduled to take place in the 11th Judicial Circuit of Florida, Miami-Dade County, before Honorable John Schlesinger beginning on May 26, 2009.
re: The Auditors will be following this coverage and providing commentary and selected video clips, including evidence presented, starting on Wednesday, May 27th.
From Courtroom TV’s Press Release:
This trial will determine whether BDO Seidman was an agent of BDO International, thus making the international accounting network potentially liable for a $500M+ judgment against US network member BDO Seidman.
Leading accountants will meet the Government this week to plead for protection as they prepare for a surge in litigation from investors trying to recover their losses from big company failures.The Big Four — Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers (PwC) — are braced for an increase in legal action from investors and liquidators as the economic crisis continues.
They have got to be kidding…
KPMG is being sued for $1bn by the liquidators of New Century, the collapsed subprime lender, in the first big case against an auditor arising from the current financial crisis. If the New Century trustee is successful, “it may embolden others to look more closely at the possibility of bringing [accounting] firms to some level of culpability for the things that happened,” that led to the credit crisis, Francine McKenna, president of McKenna Partners LLC, a corporate-governance consultancy, said in an interview in the Wall Street Journal.
No, I’m not talking about the BDO International case or the Deloitte Parmalat case, although those two are game changers too. In those cases, the audit firms may lose their ability to hide behind the “global network” model as a way to avoid liabilty for what happens to one of their satellites…What I’m talking about is a case that has been lightly publicized, except in its own world and in the local California environment. That case is Campbell v. PricewaterhouseCoopers. …the pattern and precedent, both legal and moral, that will be set will have a ripple effect throughout the accounting industry – all the firms, everywhere in the US.
In preparation for something else, I attempted to do a quick summary of the pending litigation against the Big 4.
It’s not easy.
Many of you have asked what I thought of Harry Markopolos’ testimony yesterday on the Madoff/SEC cluster schmuck.
