Comments on: The Big 4 And Their Travel Card Relationships – Comfy And Cozy

By: re: The Auditors » Blog Archive » How Satyam Supported PwC’s Schizophrenic Strategy To Reenter The Systems Integration Business

Wed, 27 May 2009 04:23:36 +0000

[...] that muddies the waters over whose side they are really on. They have cozy relationships with their travel services providers. They join their audit clients pre-retirement in senior positions. They are asked by the government [...]

By: Francine McKenna

Francine McKenna — Thu, 10 Apr 2008 04:03:00 +0000

My point was not there there is an inherent conflict. Auditing your card vendor is allowed by independence rules under the “consumer in the normal course” rules. My question is why, when there is a choice as there has been recently in both cases, the companies and firms don’t try to avoid this issue. Has anyone, including PCAOB and SEC, looked lately at whether the size of the business is “major supplier” size, whether the terms are still clean and comparable, and whether the way float and processing are handled might imply that the firms are acting “as an agent” of the card companies? That is not allowed. My intention is to encourage closer scrutiny of this situation by the regulators, given the size of the contracts and revenue passing through.

By: Anonymous

Anonymous — Thu, 10 Apr 2008 03:50:00 +0000

I fail to see the conflict of interest in auditing the provider of your T&E card. I am sure all firms have a 30 or 60 day term on these cards, so they are never carrying large balances for extended periods of time, and the overall “sales” through the cards held by the Firm is in all likelihood a very small percentage of gross. So there is no “major supplier” relationship.

Also, in theory, I think that auditing your own T&E card provider would actually do a very minor amount to reduce overall audit load. Since the firms in theory are a paragon of internal control and review all purchases made by the cards, they should techinically be able to exclude their own purchases from the sample population for auditing pruposes, no?

I could see an issue if a firm was auditing a major realestate firm of which they were a leaseholder, but with cards, not so much…