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My American Banker column on Tuesday focused on the risks to banks, their audit committees, and shareholders of an auditor who blows off its regulator. Deloitte’s ongoing conflict with the PCAOB poses the risk of undue scrutiny by other regulators and unwanted publicity to all its clients.
Going Concern reported yesterday that KPMG professionals have been ordered to preserve all correspondence and documentation related to the tax “loaned staff” assignment it has with long-time client GE. That means someone – the SEC or PCAOB – is investigating.
I’m writing now for American Banker. My first column covers a new appointment at Deloitte and how this might affect the firm’s clients in the mutual funds industry.
The PCAOB will hold an open meeting on Tuesday, August 16, to discuss a concept release soliciting public comments on ways that auditor independence, objectivity, and professional skepticism could be enhanced, including mandatory audit firm rotation. They are also soliciting comments on their Concept Release for changes to the auditor’s reporting model. I’ve written on these topics many, many times.
Making the non-obvious connections between the audit firms and their clients, between the clients and each other, and between the firms and each other is getting to be like shooting fish in a barrel.
As if Ernst & Young didn’t have enough to worry about now they’ve got a public airing of some dirty laundry by the PCAOB.
It wasn’t even a verdict. Just a decision by New York Federal Court Judge Lewis Kaplan in one of the Lehman failure cases Ernst & Young is fighting. A decision to allow substantially all of the allegations against Lehman executives and at least one of the allegations against Ernst & Young to move forward to discovery and trial. That is, if there’s not a settlement first.
Don’t get me wrong.
I’m thrilled that there’s a lot of traffic in my lane. What I mean is, it’s good for everyone that we’re talking about these issues and that someone other than me and a few other broken records are playing these tunes.
Thank goodness for the plaintiffs’ bar and class action lawsuits. And state attorneys general. Without them, there’d be very little justice yet – or compensation – for any of the mortgage-related fraud perpetrated during the real estate bubble.
There’s one thing about litigation that everyone agrees on. Anything can, and sometimes does, happen.
 Francine McKenna (@retheauditors) has more than twenty-five years of experience in consulting and professional services including tenure at two Big 4 firms, both in the US and abroad. Look for my column, "Accounting Watchdog" at Forbes.com and "Accountable" at American Banker. For more information, click "About" at the bottom of this page. Your firm can sponsor this specialized news site. For more information contact Francine McKenna, fmckenna@mckennapartners.com |
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