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You’ll Never Eat Lunch… A Review of “This Town” By Mark Leibovich

Mark Leibovich’s “This Town” is billed in the flap copy of the dust jacket as “a blistering, stunning —and often hysterically funny— examination of our ruling class’s incestuous ‘media industrial complex.’” Does anyone still eat lunch with him? In the new 24-7 news cycle, the half-life of any criticism of DC culture is about three days.

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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»

If you would like me to speak at your conference or visit your university and your accounting/audit program, please write soon to lock in the date.

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Reminiscing About The First Too Big To Fail Bank – Continental Bank»

There’s a conference planned for next week, May 15, at Gleacher Center in Chicago, “30 Years After the Failure of Continental Illinois Bank: Have We Solved Too Big to Fail?” I wrote about my experience at CINB, my first job, for American Banker back in 2011.

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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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The Case Against The Auditors

Auditor Independence: Another Case of Misplaced Loyalty»

Ryan Adams testified on behalf of PwC in an important court case. How can PwC be independent of Adam’s employer Marin Software, and Adams, the Financial Reporting Director at this newly public PwC-audited client company, if he’s testifying on PwC’s behalf in litigation that could impact PwC’s business model in California and, perhaps, nationally?

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Auditors and the Financial Crisis: Part of the Solution or Part of the Problem?»

This is the text of my speech for the Society for the Advancement of Socio-Economics Conference last Friday. The theme of this year conference was “The Institutional Foundation of Capitalism”. Our special session was entitled ‘The New Financial Architecture after Financial Crisis’.

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US Department of Justice v KPMG: Document Shows “Too Few To Fail” Was Opening Premise»

A new KPMG tax shelter era document surfaced, in original format, that had not yet been cited or quoted from in any media reports. The document tells us that late in the negotiations, June 27, 2005 the DOJ still would not agree to all of KPMG’s terms, including promising not to criminally charge the firm. But the decision to make sure the firm did not “go under” had already been made. KPMG and its Skadden attorneys only had to make sure the DOJ didn’t, in a misguided show of sheer aggressiveness, cause another Arthur Andersen.

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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

PwC Put Guy Who Whitewashed For Bank In Partner Spot»

The NYDFS PwC investigation discovered several emails that Benjamin Lawsky, the Superintendent of Financial Services for New York, characterized Monday as examples of a consultant going along with a “whitewash”.

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Big Four Takeovers Raise Concerns: McKenna Featured In “The Bottom Line”»

The August issue of The Bottom Line in Canada includes quite a few quotes and a nice color photo of me in a story about the wave of new consulting firm acquisitions by Big Four audit firms all over the world.

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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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Writing for Others

More On My Reuters Breakingviews Column: The Andersen Tax Name Grab»

The news that a tax consulting firm made up of ex-Andersen partners would take the Andersen name garnered much media attention, as you might expect. It says something—but maybe not what the firm’s partners think— that so many years after the destruction of Arthur Andersen by criminal indictment—thirteen years—so many people care.

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University of Chicago Booth Capital Ideas Magazine: Two New Articles»

I have two articles in the University of Chicago Booth Capital Ideas Magazine Summer 2014 issue. One is about bank monitoring of private company financials and the other is about bank stress test disclosure. Their cover story, “Think you’re not a racist?” is also worth a close read.

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At The University of Chicago Booth School of Business Capital Ideas Blog: Stock Options Backdating And Stress Tests»

I’ve recently published two pieces for Chicago Booth Capital Ideas Blog on stock options backdating and bank stress test disclosure. Take a look!

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You Can Quote Me On That

SEC’s Final Pay Rules Coming Any Day: Will They Be Enough To Level Playing Field?»

Senator Robert Menéndez [D-NJ], author of the Dodd-Frank pay ratio disclosure rule, didn’t take “not yet” for an answer when SEC Chair Mary Jo White testified before the Senate Banking Committee in late July a year ago. Menendez told White: “I’ve been waiting for several years now.” (Me, too!)

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Fannie Mae And Freddie Mac Are Back: More “Adjustments”, More Calls For Reform»

“If accounting errors were felonies in California, Fannie Mae would already be serving life under Three Strikes.” That’s what GoingConcern.com said. See what I told TheStreet.com about Fannie Mae’s latest multi-billion dollar “adjustments”.

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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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Food for Thought

Three Book Reviews: Naked Bankers, Mute Watchdogs, And Youthful Luchre»

Just in time for summer vacations, I’d like to offer for your consideration three books I’ve recently read.

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An e-Book: Warren Buffett and Berkshire Hathaway: Corporate Governance and The Sokol Affair»

This compilation covers the period from April 4 – when the David Sokol scandal hit – to May 3, 2011 when I attended the Berkshire Hathaway Annual Meeting in Omaha, Nebraska.

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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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