Comments on: Goldman Sachs and PwC

By: Francine McKenna

Francine McKenna — Tue, 11 Dec 2007 00:05:00 +0000

On this point I agree with Big 4 Partner wholeheartedly. Consulting subsidized audit during the late 80’s and 90’s. Audit was commoditized, considered a necessary evil by most companies and auditors accepted that. Doing what Sarbanes requires takes time and money, but more so since so many public companies got so lazy and remiss about the basic fundamentals of accounting policies, procedures, controls and required expertise during the go-go years. And it was the auditors that allowed it. Companies that continued to have tight controls and adequate, appropriate expertise in their accounting and finance departments during these years never complained about SOx. They had much less to do and their auditor could rely on their controls and so their cost inverses were proportionate and straight line. You get what you pay for. I don’t begrudge any of the firms their fees, audit or consulting, as long as they’re not being bought off in the process.

By: Independent Accountant

Independent Accountant — Sun, 09 Dec 2007 02:10:00 +0000

Big 4 Partner:
Are you a Big Four (BF) audit guy or a PR person? “The bottom line is that the cost of gettting the audit wrong is many times the profit from the audit-auditors cannot afford to look the other way”. I’m a BF alumnus, who isn’t? The fact is: they look the other way every day. Who are you kidding? The BF rarely get sued. On an expected value basis, BF litigation costs are just a cost of doing business. Do you understand expected value? How disingenous can you get?
Carl Levin (CL) said to a KPMG partner in a Congressional tax shelter hearing about two years ago, “Don’t you guys ever get tired of lying”? What made CL’s comment to KPMG partner so delightful was: one of his partners tried to have me sell the shelter in question to my clients with typical BF condescension, “our technical people in New York vetted this”. I told KPMG guy so, “I’ve got the same books you do, show me”.
I wouldn’t begrudge the BF their fees as an investor in public companies if I thought I got my money’s worth. I don’t.
By the way, the KPMG partner who contacted me was one of the 16 who was indicted! Way to go Justice Department.
I’m a radical, I think Sarbox compliance is makework, a waste of money. I’d like to see Sarbox repealed.
I wait to see KPMG weasel out being sued for SFAS 5 non-disclosures with respect to Citigroup’s SIVs. In my opinion, I think KPMG should follow AA down the rathole of CPA history for its failures in the Citigroup audit. Full disclosure: I am not now, nor have I ever been a Citigroup stockholder.

By: Big 4 Partner

Big 4 Partner — Sat, 08 Dec 2007 21:56:00 +0000

If the public and the government want more auditing then there will be more audit fees. Doesn’t matter which firm it is (Big 4 or otherwise)
The bottom line is that the cost of getting the audit wrong is many times the profit from the audit. – auditors can not afford to look the other way.

By: Independent Accountant

Independent Accountant — Sat, 08 Dec 2007 04:07:00 +0000

So where are you going with this? Last year KPMG billed Citigroup $73 million. These guys are not going to rock the boat. Who needs ‘em?