Author Archive

All The Auditors Are Above Average: Jay Hanson Allergic To “Audit Failure”

By Francine • Mar 26th, 2014

Should audit and auditor failure be solely defined by identified material misstatements that result in restatements, and internal control failures? I don’t think so but Jay Hanson, PCAOB Board member, said so recently.

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The SEC’s AgFeed Complaint: No Restatement Means No Sarbanes-Oxley Clawback

By Francine • Mar 23rd, 2014

The AgFeed case is the mother lode for an SEC that says it’s ready to rack up some accounting fraud enforcement points and, perhaps, pursue a more aggressive enforcement approach to sparsely utilized Sarbanes-Oxley provisions like Section 304, clawbacks.

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A Need for Transparency In Financial Staffing: A Guest Post From Dan Gaffney

By Francine • Mar 18th, 2014

According to Freelancers Union, almost one-third of the American workforce is independent. That’s nearly 42 million people and growing. The staffing industry, which should support the wave of new freelancers, hasn’t adapted since William Russell Kelly founded the Russell Kelly Office Service in Detroit in 1946.

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Exclusive From Monadnock Research: Big Four Fiscal 2013 Advisory Practice Rankings and Conflict Risk Metrics

By Francine • Mar 18th, 2014

This Monadnock Research Note offers an in-depth analysis of organic growth and strategic M&A in non-audit services for the Big Four audit firms, highlighting the growing risks associated with an increasing proportion of advisory relative to audit services at Big Four firms – and the conflict risk that this unique mix of services presents.

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A China Fraud Dissected: Part 3 AgFeed’s Trusted Advisors Protiviti and Latham & Watkins

By Francine • Mar 7th, 2014

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

By Francine • Feb 28th, 2014

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

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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