Ok

By continuing your visit to this site, you accept the use of cookies. These ensure the smooth running of our services. Learn more.

10/08/2008

The history is written from day to day, a page is undoubtedly turning itself for the big four

Prem Sikka wrote an interesting article in the Guardian.
"The auditors have failed : No one expects auditors to guarantee the survival of a company, yet they did not even notice any of the red warning flag"

He observes that each collapse shows that highly paid directors had little idea of the value of company assets, liabilities, income, costs, profits and financial health. This has been accompanied by one constant factor: the silence of the auditors.
He explains that auditors continue to act as advisers to the companies that they audit. They are hired and remunerated by the very organisations that they are supposed to be auditing. The auditor's dependence for fees on corporate barons makes it impossible for them to be independent. Their understanding of the businesses that they audited must also be doubted. The auditing industry has consistently failed to provide value for money.
He concludes that no doubt the auditors would point out that that all of the audits in question complied with all extant auditing standards. That, if anything, further confirms the poverty of the present auditing requirements. By all accounts the current auditing model is broken and cannot be repaired. This was also evident from audit failures at Maxwell, Bank of Credit and Commerce International (BCCI), Enron, WorldCom and numerous other scandals. Yet successive governments have always given in to the well-oiled accounting lobby, which prefers feather-duster audits and fat fees. The only effective way forward is for the regulators to take direct responsibility for auditing banks and financial institutions.

Jim Perterson, an international lawyer and consultant on disputes and risk management, had warned almost one year ago in the IHT.
He observed that despite the threat to the survival of the Big Four accounting firms, none of the players - not the Big Four leaders, regulators or politicians, or the community of financial information users - will say it straight out: The large auditors' business model is broken, and their risks are unsustainable. The next large-firm failure will take down the other Big Three as well, just as fast as Arthur Andersen crashed in 2002, leaving large companies unable to obtain the current form of audit report from any source.

The auditor-auditee relationship is a commercial relationship after all (audit firms communicate on their growth) and everyone knows that if his/her audit firm is not flexible enough the auditee may change the auditor and there always will be a competitor to accept and condone problems.


18:14 Posted in General | Permalink | Comments (0)

GRECO addendum to the Compliance Report on Luxembourg is online

GRECO addendum to the Compliance Report on Luxembourg (Second Evaluation Round) adopted by GRECO at its 38th Plenary Meeting (Strasbourg, 9-13 June 2008) is online.

Better late than never.

GRECO notes that the Luxembourg authorities have mentioned a number of projects initiated, including several Bills, which might help guarantee the complete implementation of the aforementioned recommendations. GRECO acknowledges that the progress of several of these initiatives as reported, including the Bill geared to guaranteeing general access to public documents and that on introducing criminal responsibility on the part of legal persons, constitutes a major step forward as compared with the situation described in the Compliance Report. Nevertheless, GRECO
notes that these two Bills have not yet been completed and consequently that over half of the recommendations to Luxembourg remain only partly implemented. It therefore asks Luxembourg to do its utmost to complete the projects mentioned in this report in order to guarantee complete
implementation of these recommendations. The authorities may wish to report the subsequent progress to GRECO in due course.

Read report

13:39 Posted in Luxembourg | Permalink | Comments (0)

10/07/2008

PricewaterhouseCoopers 2008 revenues rose 8% to US$28.2 billion

“Despite the challenges posed by the continuing credit crunch particularly, in developed markets, PwC’s results held up well, and all of our lines of business and firms continue to grow.”

Samuel A. DiPiazza Jr, CEO PricewaterhouseCoopers International in a press release.

I find it indecent that in the current financial mess with probably some auditors' responsibility whatever firm, what counts for PwC should be growing i.e. making money. Dont't you?


What about the IFAC warning ?

If the CEO’s message is aggressive growth and ‘make the numbers’ first and foremost, then the organization will reflect those priorities. If the CEO emphasizes transparency and integrity, as well as performance, then the organization will respond accordingly"

Mr DiPiazza does not call for transparency and integrity in the press release.

I am sad of that.

11:05 Posted in General | Permalink | Comments (0)