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Available Now: re: The Auditors: The Mystery of The MF Global Failure
This book is the fourth in a series of compilations from re: The Auditors. This volume focuses on the failure of MF Global on October 31, 2011. MF Global was a broker-dealer and futures commission merchant (FCM).
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.
It’s difficult for me to imagine a new generation of systemically important financial services company CEOs without strong risk management experience. But the newly prominent role also gives shareholders, regulators, and the media an easy target for ridicule after a corporate stumble or failure.
Your first obligation as a professional is to your client, not your firm, your partners, or even your family.
Amazing but true, the MF Global story is still red hot, reason being $1.2 billion in customer funds is still missing. Here’s a recap of recent columns at Forbes and American Banker that have tracked new developments.
I was the first to report on December 6 the irony of Deloitte having been selected by, of all banks, JP Morgan Chase. The high likelihood of a conflict between the bank and the audit firm, and possibly the individual Deloitte partners assigned to the JP Morgan Chase review, should have been obvious to anyone at the OCC. It turns out I was right.
Almost everyone wondering where the missing MF Global customer assets have gone thinks they will show up eventually. I believe the assets are long gone.
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.
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.
 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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