Author Archive

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

By Francine • Feb 26th, 2014

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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Point-by-Point Case Comparison Of MF Global, Sentinel and PFG Best

By Francine • Feb 24th, 2014

Here’s a breakdown of some of what’s the same and what’s different about these three cases.

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Are All Big Four Partners Evil Or Just Leadership? Pondering The Problem of Evil

By Francine • Feb 23rd, 2014

How do professionals forget what’s right and wrong? Adolf Eichmann was a “new type of criminal, who is actually hostis generic humani . . . [and] commits his crimes under circumstances that make it well-nigh impossible for him to know or to feel that he is doing wrong.”

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Guest Lectures At Stanford Graduate School Business

By Francine • Feb 22nd, 2014

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

By Francine • Feb 19th, 2014

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

By Francine • Feb 18th, 2014

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

By Francine • Feb 13th, 2014

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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Next Up On The “Operation Broken Gate” Agenda? Could Be PwC and Thomson Reuters

By Francine • Feb 3rd, 2014

Now that the Securities and Exchange Commission has crossed KPMG’s independence violations off its to-do list, the agency can move on to the rest of the ones I’ve already identified for them. How about PwC and its business relationships and myriad services provided to audit client Thomson Reuters?

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New Work Appearing At Al Jazeera Online

By Francine • Jan 30th, 2014

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

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Not That Satisfying: SEC Slams KPMG For Independence Violations

By Francine • Jan 28th, 2014

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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