In the last few weeks, I’ve written two very different stories about Deloitte. Both stories bothered me, but in different ways, so I was compelled to write about the firm both in unsympathetic and sympathetic terms. In the end, neither story says much about the state of the audit industry and the pre-2011 regulation of the audit firms.
It was a quiet almost-end to a sordid chapter in PwC’s history. Last week I wrote about PwC’s settlement of their Satyam class action lawsuits in New York for Forbes. Here’s some additional commentary and analysis, including links to all the stories I’ve written about the scandal since it broke in January 2009.
My Forbes column today is about the Chinese reverse merger market and recent reports of potential frauds – plural. I waited for the inevitable case that implicated a Big 4 audit firm. When it came I got two for the price of one and a bonus – a great new research paper from the PCAOB on the Chinese reverse merger phenomenon.
You might as well be trying to save walruses from an oil spill in the Gulf of Mexico. The Big 4 audit firms’ response plans in the event of catastrophic litigation, if they exist, are likely cookie-cutter boilerplate, out of date, irrelevant and prepared by the same go-to defense lawyers that shill for them and repeatedly negotiate their settlements.
It’s time for the PCAOB Board to think about how they might respond when the audit firms are not going to be so pleased as punch. There’s much for them to address. I’ll be talking about some of those changes and improvements in future posts. But, the most important role of the PCAOB is the inspections process. Let’s take a look at how well that’s going.
“The regulator said auditing firms needed to pay “particular attention” to guidance that it had previously issued on monitoring transactions taking place around year-end, as well as the procedures expected to be followed by auditors…” If that sounds like Lehman Brothers, it’s because the kinds of tricks and techniques used there, such as Repo 105, are neither new nor unique.
Which firms have the most Madoff-related claims? Which audit firm locations are named most often? Which filings do not name an audit firm and why? How many name the international audit network umbrella firm? Shouldn’t they all?
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.
Broc Romanek over at The Corporate Counsel.Net has blogged about re: The Auditors twice today. He links to a podcast he asked me to tape recently on the Ernst and Young restructuring outside of the US. For the original post that caught his attention, go here. He also liked my take on his poll about access, […]
Floyd Norris of the New York Times wrote today about the Big 4 (and the next tier firms) contradictory claims regarding their global network versus their liability for their affiliate firms. He tells the story of the current litigation regarding BDO and Banco Espiritu Santo. Their lawyer actually argued against the concept of BDO as […]
To introduce this topic, let’s start with excerpts from a Frontline series, dated June 2002, Bigger Than Enron. In the segment entitled Congress and the Accounting Wars, the history and politics of independence legislation supported strongly by then SEC Chairman Arthur Levitt and eventually incorporated in the Sarbanes-Oxley legislation of 2002 is described. At the […]
