Ethics and governance in the European Financial centers

As I already said auditors have a responsibility in the collapse of confidence : many of them certified accounts despite red flags all the more than the relationship auditor-auditee is a commercial relationship. I the auditor does not certify he knows that he may lose the client. As far as declarations of suspicion are concerned, of the auditor report a declaration of suspicion he knpws that he will lose the client (and the prospects).

An Early Day Motion was published last 16 October in the UK :

That this House is concerned to find that the banks which have failed in the US, Britain and the EU all had clean bills of health from auditors who are dependent for their appointment and fees on companies and their directors; notes that in all these cases auditors also acted as consultants to the companies and reported on the transactions they created, resulting in a financial dependency which inhibited auditors from doing effective audits or drawing public attention to the questionable mixture of toxic debts, off balance sheet accounting, and dubious asset values which brought the banks down; points out that in 2007 PriceWaterhouseCoopers charged Northern Rock £2.4 million (2006: £1.8 million) of which £1 million (2006: £1 million) was for consultancy, KPMG charged Bradford and Bingley £1.4 million (2006: £1.7 million) of which £0.8 million (2006: £0.8 million) was for consultancy, KPMG charged HBOS £11.4 million (2006: £11.2 million) of which £3.4 million (2006: £4.4 million) was for consultancy, Deloitte and Touche charged RBS £31.4 million (2006: £23 million) of which £14.2 million (2006: £11.1 million) was for consultancy and PriceWaterhouseCoopers charged Lloyds TSB £14.6 million (2006: £17 million) of which £1.5 million (2006: £2 million) was for consultancy; and therefore suggests that audits of banks should be directly conducted by the regulators on a real time basis and external auditors of banks must not act as consultants to the banks or the directors

I wish other parliaments reported the issue.


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