Auditor Rotation and Banks: If It Makes You Happy…
My column today at American Banker is about the PCAOB’s auditor rotation and auditor independence concept release and its impact on banks. My favorite lines are…
Posts
Are Auditors Reporting Fraud And Illegal Acts? The SEC Knows But Isn’t Telling
/8 Comments/in Attorney-Client Privilege, Independence, Latest, PCAOB, Pure Content, Regulators, Laws, Standards, Regulations, Sarbanes-Oxley, SEC, The Case Against The AuditorsThere are still many unanswered questions about how and why the financial crisis frauds occurred. New frauds, such as the Chinese reverse merger frauds, took advantage of a public listing loophole that the SEC and auditors missed. All these investor losses occurred under the supposedly watchful eyes of auditors, who are paid dearly to protect shareholders but in many cases are either complicit, incompetent, or both.
How Do You Hide A Multibillion Dollar Loss? Accounting For The Olympus Fraud
/23 Comments/in Latest, Pure Content, The Big 4 And GlobalizationI asked CPA and blogger Jim Ulvog to write a guest post on the Olympus scandal because he was the only one to explain it to me from an accounting perspective. An investigative report prepared by auditor Ernst & Young Shin Nihon – yes, the one that missed the fraud – is a scathing indictment of the company and others potentially complicit in the multi-year subterfuge.
Update: Mortgage Servicer Foreclosure Review Process
/4 Comments/in Attorney-Client Privilege, Bear Stearns, Deloitte, EY, Fraud, Independence, Latest, PricewaterhouseCoopers, Pure Content, Regulators, Laws, Standards, Regulations, Subprime, The Big 4 And ConsultingI was the first to report on December 6 the irony of Deloitte having been selected by, of all banks, JP Morgan Chase. The high likelihood of a conflict between the bank and the audit firm, and possibly the individual Deloitte partners assigned to the JP Morgan Chase review, should have been obvious to anyone at the OCC. It turns out I was right.
At Deloitte, More Pain Before Any Quality Gain
/18 Comments/in Latest, Pure Content, Regulators, Laws, Standards, Regulations, The Case Against The Auditors, The Firmsre: The Auditors has seen a confidential, internal Deloitte training document, prepared this past summer, that reveals the firm expects the worst when the inspection reports for their 2009, 2010, and 2011 audits are published by the PCAOB. Is Deloitte truly committed to a sea change in tone as well as technique? I’m not convinced.
Servicing The Mortgage Industry: An Update
/1 Comment/in Pure Content, Subprime, The Big 4 And Consulting, The FirmsMy October 6 column for American Banker was cited by Congresswoman Maxine Waters and others to support the strong management of conflicts of interest by the OCC in the mortgage servicer reviews as well as full disclosure of vendors and their engagement letters with the banks. On November 22, 2011, the Office of the Comptroller of the Currency (OCC) disclosed the names of the consultants, their clients and redacted versions of the engagement letters between the banks and consultants.
A Closer Look At Clawbacks
/4 Comments/in Latest, Pure Content, Regulators, Laws, Standards, Regulations, SEC, Subprime, The Case Against The AuditorsThe Sarbanes-Oxley Act of 2002 and Dodd-Frank’s clawback provision both require a restatement. The restatement of financial results to correct material errors – whether those errors occurred by default or by design – is a necessary condition for enforcing both the Sarbanes-Oxley Section 304 provision and the new Dodd-Frank law.
Hello? Big 4? Are You Out There?
/45 Comments/in Pure Content, You Can Quote Me On ThatThis post was originally published three years ago on September 17, 2008. Given everything that is going on – ongoing investigation of EY’s role in Lehman collapse, more lawsuits against the Big 4 audit firms for crisis failures, disclosure of Deloitte’s failings as an auditor as far back as 2006 – I thought it may […]
Ernst & Young and Lehman Brothers: A Summary of Quotes, Stories and Links
/16 Comments/in Pure Content, The Case Against The AuditorsThe release of Anton Valukas’ Lehman Bankruptcy Examiner’s Report on March 11, 2010 threw a fresh match on the still smoldering remains of the 2008 failure. The mainstream media, regulators, legislators and the business community had blamed everything but fraud for the financial crisis and everyone but the audit firms for preventing, warning or mitigating the devastating impact of the crisis.If you’ve been reading the stories on this site, however, you may have come to the conclusion that I did a long time ago:
There was widespread fraud at the highest levels and the Big 4 auditors will eventually be accused of malpractice and complicity for doing nothing to prevent it , to warn us, or mitigate the impact on stakeholders
The Berkshire Hathaway Corporate Governance Performance
/4 Comments/in Latest, Pure Content, You Can Quote Me On ThatThe next time something goes terribly wrong at a Berkshire Hathaway company, there’s a strong possibility no one will hear about it. Warren Buffett and Charlie Munger won’t be held directly responsible either. That’s the beauty of Buffett’s version of a conglomerate corporate structure, decentralized to such an obscene level such that its minimalism is brandished as a feature not a bug.
An OpEd For Boston Review: What Sarbanes-Oxley Teaches Us About Dodd-Frank
/4 Comments/in Food for Thought, Pure ContentSarbanes-Oxley was supposed to end financial scandals once and for all. Will Dodd-Frank succeed where it failed? My OpEd for Boston Review is online today, Monday, August 22, 2011.
New @Forbes: Bank of America Plays Hide And Seek Using Fannie Mae
/in Audit Quality, Fair Value, Fraud, Regulators, Laws, Standards, Regulations, SEC, Subprime, You Can Quote Me On ThatMaking the non-obvious connections between the audit firms and their clients, between the clients and each other, and between the firms and each other is getting to be like shooting fish in a barrel.