Comments on: What I’d Do: Part 2 – First We Focus On The Client

By: ex-DT

ex-DT — Fri, 17 Jul 2009 16:07:09 +0000

@136: I totally agree. However often short term and longer term goals do not align. Long term, hearing and learning from an independent (in a general sense) view of the cold hard truth should make the client stronger, short term it takes on a more personal and troublesome tone for those involved if the news is not good. Telling the client things are getting better while justifying internally why something isn’t a big audit issue (when it should be) is not the right way to do it – but it happens….and just happens to keep the client feeling better about themselves.

By: Anonymous

Anonymous — Fri, 17 Jul 2009 05:41:49 +0000

In my experience it is my job to listen to the client and to find ways to tell them when they are making mistakes or applying a poor methodology. However, once I’ve said my peace, it is their decision to make and it is time to step back and let them run their business. In my experience the client with any integrity want me to tell them the truth, as I see it, good or bad. That is what makes clients happy — if and only if you are right or at a minimum present valuable insight for them to consider.

By: Ex-DT

Ex-DT — Thu, 16 Jul 2009 22:51:20 +0000

In my experience, keeping the client happy takes precedence over being the bearer of bad news. Not to stop the news totally but at least to water it down significantly…….

By: Anonymous

Anonymous — Thu, 16 Jul 2009 16:13:45 +0000

@m – they have to generate business. They cannot live solely by reputation. Reputation helps maintain annuity clients, repeat (yet not so regular) clients, and via word of mouth bring in new clients. But the growth of that model isn’t particularly fast. Most entrepreneurs seek faster growth and growth beyond the stable and sustainable. They want to “expand”. True expansion requires actively generating new business while still maintaining that reputation.

By: m

Thu, 16 Jul 2009 11:34:14 +0000

@anon

I agree. In theory, in the long run protecting one’s reputation will generate stable and profitable business. That’s a line the firm keep throwing out there. There’s still that inherent risk that partners will ignore it. My limited understanding of what goes on in the upper levels is that partners are actively encouraged to generate business.

By: Anonymous

Anonymous — Thu, 16 Jul 2009 05:18:08 +0000

Correct – in the short term mistakes are often made for the sake of immeidate cash/revenue. In the long run protecting one’s reputation will generate a stable and profittable business. I think you have struck another point that adds to the only major comment this post has really produced… the point being that the people paying the bills are not the true client and that this compromises independence. If you add that point to the fact that short term thinking (which is more likely in financial downturns) results in short term decision-making (i.e., not producing the quality work that will maintain your reputation)… then you might have the basis of the “broken model”. This combination is deadly if placed in the wrong hands. This comment is interesting to me.

Once again though – as I am not in audit, I do not see this as broken in my practice area.

By: m

Wed, 15 Jul 2009 17:24:25 +0000

@ J

“Fortunately I am not an accountant or an auditor or I wouldn’t even be able to afford to type out the word Prada.”

Re: That comment is uncalled for.

“Do you have a post that explain what you think the responsibility of the Big4 is. One of your articles seems to indicate they are responsible for the financial meltdown. Not being an accountant myself I thought their job was to certify the financial statements were accurate to published standards, and not to advise companies how to run their businesses.”

Re: While it is true that auditors are not there to advise companies on how to run their business, my understanding is that auditors issue a going concern statement. In theory, that should involve some analysis of a company’s risky activities. It seems logical to assume that since auditors by principle should be professionally skeptical and that auditors are responsible for going concern, the financial crisis is well within the scope of their jurisdiction. Correct me if i’m wrong.

I don’t know if the audit model is broken, but at the very least, it’s damaged. I’m sure this has been discussed, but when an auditor becomes dependent financially on a client to remain solvent and pay its fees, how can true independence exist? How reluctant would a firm be to issue a qualified opinon? Isn’t that almost like shooting your revenue pipeline? Sure, you can argue that firms won’t take on excessive risk for reward. But short-term thinking and greed takes over in some instances.

By: @fm

@fm — Wed, 22 Apr 2009 23:27:41 +0000

You are doing a great job here…or rather, you have provided a mechanism to expose the underbelly of the big 4 more specifically of deloitte partners, managers/senior managers who until now discreetly went about their nasty business with people not figuring out what happened and why…now we are all aware and can see through those pathetic folks….

By: Billy Bob

Billy Bob — Wed, 22 Apr 2009 13:30:26 +0000

Dear FM: My comment was directed to J. I get a kick out people defending the indefenisble (such as the Big 4’s way of conducting “business” these days).

By: fm

fm — Wed, 22 Apr 2009 13:19:29 +0000

@Billy Bob @J

I’m a Gemini. I’m an over-communicator. A blog, ideally is a conversation, not a one-sided lecture. That’s why all the comments are interesting and gratifying to me. I just wish some commenters would read the older posts. I seem to have to keep repeating… Oh well…

Francine