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


Ernst & Young is growing while clients and stakeholders are crying

Ernst & Young announced that its combined worldwide revenues increased to US$24.5 billion for the fiscal year ending 30 June 2008. This represented a year-on-year revenue increase of US$3.4 billion and a growth rate of 16.2% (9.5% in local currency [lc] terms). This growth was the result of winning new clients and the introduction of new services, as well as returns on investment in the emerging markets. It was partially offset by audit efficiencies enabled by the new US internal control standard and the economic downturn in many markets.

“This was an important year for Ernst & Young for more than just our continued strong growth,”
James S. Turley (Ernst & Young Global Chairman and CEO )

As I said for PwC such communication on the growth is indecent.

Auditors have a strong responsibility in the current financial mess as accounts certified cannot be trusted anymore.

By the way who audited Lehman Brothers ?

17:33 Posted in General | Permalink | Comments (0)


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)


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)