Latest

PwC, And HP, Sued By Mobile Monitor Technologies LLC For Theft of Trade Secrets

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.

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The Big 4 And Globalization

A China Fraud Dissected: Part 3 AgFeed’s Trusted Advisors Protiviti and Latham & Watkins»

Company executives and directors like to believe they can purchase a posse of “trusted advisors”. Instead, they’ve often only bought a gaggle of self-interested auditors, lawyers, and consultants. But to whom does each of those vendors owe loyalty?

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A China Fraud Dissected: Part 2 AgFeed’s Auditors»

AgFeed had the benefit of two PCAOB registered and inspected audit firms. There is no indication on either the SEC or PCAOB website of an investigation of either for what happened at AgFeed. Is this one going to end badly, too, like the Gately case?

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A China Fraud Dissected: Part 1 Milton Webster, AgFeed Audit Committee Member and Whistleblower»

It is highly unusual for a board member, especially an audit committee member, to be a fraud whistleblower for a public company. Milton Webster, a former AgFeed director, did it but he, unfortunately, won’t be around to see the result of his significant social and professional sacrifice.

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Where I've Been

Speaking Engagements/Conferences»

Coming up: A visit to Old Dominion University and the Hampton Roads Economic Club and Benedictine University, Lisle, IL.

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Guest Lectures At Stanford Graduate School Business»

My notes for guest lectures (there were two sections, back-to-back) February 10, 2014 for Bus F332/Law 725, Finance and Society, at Stanford University Graduate School of Business, taught by Professor Anat Admati. Emphasis: The auditors’ role in corporate governance in financial institutions and specifically how auditors not inadvertently stifle the actual use of compensation clawbacks.

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Top Finance Bloggers in Chicago According to Crain’s»

I’m very proud to have been included in the Crain’s Chicago Business list of top local finance bloggers.

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The Case Against The Auditors

All The Auditors Are Above Average: Jay Hanson Allergic To “Audit Failure”»

Should audit and auditor failure be solely defined by identified material misstatements that result in restatements, and internal control failures? I don’t think so but Jay Hanson, PCAOB Board member, said so recently.

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PwC Faces A Trial For SemGroup Audit And Its Defense Is Predictably Slick»

PwC is scheduled to go to trial for malpractice related to the bankruptcy of SemGroup in August, almost six years later. The SemGroup Litigation Trust, pursuing claims on behalf of the company and its creditors, alleges PwC did a terrible audit. But it’s worse than just lousy auditing, especially if a trial exposes the truth of PwC’s disingenuous defenses.

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VC Horowitz Implicates Auditor PwC In Story About Dodging Backdating Bullet»

Imagine my surprise when Ben Horowitz, one half of the venture capital team of Andreessen Horowitz, wrote a blog post about dodging a stock option backdating jail term that also implicates PwC.

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Your Career

The Saga Of Stephen Glass: A Guest Post Morality Tale From Eric Starkman»

Is it fair to “tar and feather” professionals when they are sued or only when they are convicted of crimes? How much time must pass before they can get on with their lives?

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Madoff, MLK, Buddha And Elusive Nature of Self-Interest»

Your first obligation as a professional is to your client, not your firm, your partners, or even your family.

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An Interview For The Society of Professional Journalists Region 1 Conference»

David Levitt of the Society of Professional Journalists Region 1 in New Jersey
asked me back in April to answer a few questions for a conference panel I, unfortunately, could not attend live.

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The Big 4 And Consulting

Exclusive From Monadnock Research: Big Four Fiscal 2013 Advisory Practice Rankings and Conflict Risk Metrics»

This Monadnock Research Note offers an in-depth analysis of organic growth and strategic M&A in non-audit services for the Big Four audit firms, highlighting the growing risks associated with an increasing proportion of advisory relative to audit services at Big Four firms – and the conflict risk that this unique mix of services presents.

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Global Audit Firms Take “Pay To Play” From Sponsored Content to Conferences»

If we can’t trust journalists to sort out who’s telling the truth and who’s just selling us, who can we trust?

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Five Auditor Independence Issues PCAOB SAG Not Yet Addressing»

There are five big auditor independence issues that space prevented a full discussion of yesterday and that are not on the agenda of the PCAOB SAG meeting this week. My hope is that regulators, policy makers and other interested parties will start talking about these issues, too, while I am in DC this week.

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Writing for Others

New Work Appearing At Al Jazeera Online»

Two new pieces, on ethics and investor protection, at Al Jazeera America Online.

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Writing For University of Chicago Booth School of Business Capital Ideas Magazine And Blog»

I’m writing for the University of Chicago Booth School of Business Capital Ideas magazine and blog now, too. The purpose is to highlight faculty research.

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McKenna Finalist For UCLA’s Loeb Awards For Business Journalism»

I have been named a finalist for UCLA’s Gerald Loeb Awards for my work in Forbes magazine last year. I’m a “professional who writes” but also a professional writer and a journalist. You’ve been warned.

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You Can Quote Me On That

Benjamin Wey Sent Me A Threatening Email About AgFeed»

I received a threatening email yesterday from Chinese stock promoter Tianbing “Benjamin” Wey, whose New York Global Group (“NYGG”) was closely affiliated with the failed, fraudulent Chinese hog producer AgFeed during the period under litigation by the SEC and shareholders. He did not like my mention of his relationship to AgFeed, its auditor and its executives in a recent post about AgFeed’s audit firms. His claims are not only strange but wrong.

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Not That Satisfying: SEC Slams KPMG For Independence Violations»

It’s been almost three years since I first broke the story of KPMG’s loaned tax staff arrangement with audit client GE. On January 24 the Securities and Exchange Commission (SEC) announced an $8.2 million settlement with KPMG over violations of auditor-independence rules. The wheels of justice turn very slowly. But the GE case was not one of the three cited as the subject of the enforcement action.

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Jamie Dimon (And JP Morgan) Besieged»

A blog post at Medium.com last Friday updated everyone with the latest on the JP Morgan “Whale” traders who were indicted last week and assorted other energy trading and mortgage related investigations. But there’s more!

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Food for Thought

Guest Post From Eric Starkman: The “Unvarnished” Truth About General Motors»

GM is in trouble again and this time it’s worse than some weak internal controls or even a bankruptcy. Cost cutting may have discouraged the prompt replacement of faulty ignition switches now linked to at least 13 fatalities and the recall of 2.6 million vehicles. Are you still glad we bailed the company out?

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The SEC’s AgFeed Complaint: No Restatement Means No Sarbanes-Oxley Clawback»

The AgFeed case is the mother lode for an SEC that says it’s ready to rack up some accounting fraud enforcement points and, perhaps, pursue a more aggressive enforcement approach to sparsely utilized Sarbanes-Oxley provisions like Section 304, clawbacks.

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A Need for Transparency In Financial Staffing: A Guest Post From Dan Gaffney»

According to Freelancers Union, almost one-third of the American workforce is independent. That’s nearly 42 million people and growing. The staffing industry, which should support the wave of new freelancers, hasn’t adapted since William Russell Kelly founded the Russell Kelly Office Service in Detroit in 1946.

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