An ugly lawsuit filed by Mobile Monitor Technologies LLC against PwC and HP could be an excellent example of what Monadnock’s Mark O’Connor referred to in a recent post here: Advisory work that auditors perform can present an untenable conflict in performing their primary role, and public duty to the capital markets, as auditors.
Multinationals are under increasing scrutiny for income shifting and offshoring profits. I reported on the issues and U.S. legislative status in December in Accountancy, a magazine for the profession in the UK.
When HP announced its intention to acquire Autonomy, the British data analysis firm now mired in accusations of serious fraud, Deloitte probably shed some enormous tears of joy. Deloitte can now openly replace those Autonomy audit fees with guilt-free consulting and lucrative alliance deals.
I was asked to talk about HP and Autonomy tonight on NPR’s “All Things Considered” program.
Leaders of public companies, like policemen or firemen that do a job for money, also sign up for a public duty. As stewards of a public company, the CEO and CFO’s job is not a reward for years of service, an entitlement after achieving career objectives but a responsibility and honor that should be earned every day by setting an example for all those who work under them. The auditors serve the role of independent watchdog, guardian of shareholders’ interests in the capital markets. Their relationship to management should be adversarial – not friendly, cozy and comfortable.