What's behind the SEC's auditor independence warning? Auditors don't care about reputation risk anymore

Another question I get all the time: Professionalism and trust is the cornerstone of auditing! Would an auditor ever risk their reputation to collude with an unsavory client? It’s a myth that the largest global audit firms will avoid doing anything that harms their reputation, and will police their own to make sure any professionals […]

Part 1: The SEC's Dodd-Frank Clawback Proposal

It’s too little, too complicated, and too late. Is the SEC just pulling our chain? There is something in the pang of change, More than the heart can bear, Unhappiness remembering happiness. Euripides Today is Part 1 where I will describe the SEC’s Dodd-Frank Sec. 954 clawback proposal, the reopened comment request and some of […]

Busting the myth about auditors and fraud

One question I get all the time is, “Are auditors obligated to detect fraud?” This morning I was asked to speak on a panel at a conference sponsored by the Polish Audit Oversight Agency. Our panel was focused on the role of auditors in corporate governance: The auditors role in fraud detection and prevention as […]

Introducing Ozy Media: Following the formula of "fake it until you make it" then collapse in alleged fraud

This time the pitch was “bland Black media,” creating a powerful dose of “stars in their eyes” for media and investors. Once is happenstance. Twice is coincidence. Three times is enemy action. Ian Fleming, creator of James Bond. In a column after the column that broke Ozy Media, Ben Smith of The New York Times […]

Paper Tigers: If Chinese companies are kicked off U.S. exchanges will anyone notice?

Gary Gensler may finally do what U.S. law has allowed for twenty years – delist Chinese companies that won’t cooperate with U.S. regulators. In appearance it is very powerful but in reality it is nothing to be afraid of; it is a paper tiger. Outwardly a tiger, it is made of paper, unable to withstand […]

The PCAOB hasn't published pandemic period audit inspection results yet but PwC promises nearly zero defects

PwC was in the hot seat after results deteriorated for 2019. But overnight improvements in audit inspection results are not that easy to achieve. In our teaching case, Corruption in the Auditor Inspection Process: The Case of KPMG and the PCAOB, we asked students to reflect on the dramatic improvement in KPMG’s Public Company Accounting […]

Coinbase and its SEC-registered broker-dealers: Are they ready for prime-time?

Coinbase matches crypto trades and holds those assets for customers. Why resist securities? Part 1, yesterday, ran down the debate over whether Coinbase’s Lend product is a security and why it should be no surprise that the company and its CEO thought they would get away with putting it on some regulatory island, in between […]

To be regulated or not to be regulated? The Coinbase question

Coinbase is resisting, on principle, almost every regulatory encroachment. How long can this go on? Update: At 5pm on Friday Sept. 17, Coinbase updated its blog post from June 29 that had “announced” its Lend product to say it was cancelling that launch. That’s what I would call a very quick answer to my question. […]

If markets move on stories and momentum, who needs an audit?

Until something goes wrong, hardly anyone reads the 10-Ks or wants an audit Almost all buyers and sellers of equities, large and small, seem to be just fine with trading trillions dollars of private and public company shares based on unaudited earnings press release information filled with never-to-be audited non-GAAP metrics. So why bother mandating external […]

An exclusive interview with auditing whistleblower Mauro Botta

Mauro Botta sued PwC alleging the audit firm terminated him for blowing the whistle to the SEC. He lost his case but his experience provides plenty of lessons for others. On July 26, a federal judge in California delivered a decision Mauro Botta had been waiting to hear for more than five years, at least. […]

Magnetar does SPACs, in a big way, with a sprinkle of star power

A magnetar is a type of neutron star believed to have an extremely powerful magnetic field. Magnetar Capital uses its magnetic powers to attract a big name to two of its sponsored SPACS. Institutional Investor ‘s Steven Taub noted the SPAC-related activities of an infamous name in finance — Magnetar — back in December 2020. […]

Berkshire Hathaway hears from the SEC about goodwill

It’s a small win but a significant one. Watch this space… On April 30, 2021, about three months ago, I wrote for paid subscribers only about Berkshire Hathaway. Every period there is a significant amount of adjustment of goodwill and intangible assets, restructuring expense, and adjustment of acquisition-related expenses but it is typically recorded at […]