What’s different about this Chinese fraud lawsuit is that it names a US Big Four firm as a defendant. Not only has that not been done before but the US firms have traditionally been able to insulate themselves fairly successfully from frauds that happen abroad. It’s that global network “thang”.
I was recently interviewed for the radio show, Background Briefing, and the segment, “Auditing the Auditors,” that aired Sunday August 14th in Australia. The transcript and a podcast are available. I get the last word in response to a defense of the auditors by John Hempton re: the Chinese reverse merger scandals.
It’s the potential for sudden conflagrations in developing countries that keeps the global audit firms – PwC in this case – up at night. The legal quagmires in developed countries are messy, too. PwC may want to put the Satyam scandal behind them but, unfortunately, I fear there’s still much more pain for the firm to come.
The UK accounting firms’ response to the “pressure” on the industry post-crisis is sharp, quick, and on message. But the “pressure” itself feels like a sinister strategy orchestrated by the audit firms to force legislators to grant their wishes under the mistaken assumption they’re “regulating” the industry.
Let me break it down for you.
The Economic Affairs Committee of the House of Lords questioned representatives of the four largest audit firms on the issue of “going concern” opinions during the financial crisis. In particular, why were there none for the banks that failed, were bailed out, or were nationalized? The auditors admitted that they did not issue “going concern” opinions because they were told by government officials, confidentially, that the banks would be bailed out.
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.
Picture Source My Twitter communiques (follow me!) reported my pleasure at the invitation to a private dinner Monday night with a delegation from the European Parliament. I accepted it immediately, when it arrived, not knowing how or why it had. But a luxe dinner with smart people, especially foreign visitors, is always my cup of […]