Robert Ricketts, Texas Tech University and Rawls College of Business accounting department chairman, invited me to speak at his school last April. Here’s a link to the presentation, an excerpt and some additional comments on recent news.
Archive for the ‘Audit Firm Management’ Category
Here’s how KPMG Chairman John Veihmeyer explained Scott London’s inside trading and the firm’s response to accounting professors, an important stop in the audit industry supply chain.
I noticed a small little thing in one of the first stories about Scott London. As I tried to research and write about it, I waited for someone else to pick up on it. (No one else did.) Scott London seems to have subverted the intent of Sarbanes-Oxley Section 203 that requires lead engagement partner rotation off engagements to promote objectivity, independence and professional skepticism.
HP announced today it is writing down more than $5 billion, or almost half of the Autonomy acquisition price, because of “serious accounting improprieties, misrepresentation and disclosure failures” by Autonomy former executives. Deloitte was the auditor of Autonomy, a UK software firm acquired by HP in 2011 for $11.1 billion.
How much lower does investor confidence have to go? How many more billions do customers have to lose before someone steps up?
You have to go outside of the US to see a trial of a Big Four audit firm to know what I’m talking about. Australia’s Centro case against PwC or Canada’s Nortel case where Deloitte partners testified recently tell you everything you need to know about why the Big Four will settle every time. Rather than have a jury and the public hear and see the pathetic state of the audit profession, its inability to stop executives who want to cheat, and its unwillingness to acknowledge liability as a firm when it screws up, the firms will reach into their seemingly bottomless pockets and pay up.
The Securities and Exchange Commission is rattling a dull sabre again towards Shanghai-based Deloitte Touche Tohmatsu CPA Ltd. for its refusal to provide the agency with audit work papers related to another China-based company under investigation for potential accounting fraud against U.S. investors. It looks to me like it’s personal rather than productive.
I expect the auditors to earn their fees by looking out for investors. But maybe that’s just pie in the sky.
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.