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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.
Although the state and federal wage and hour laws governing eligibility for overtime pay are complicated, the public policy issues they present for audit firms are not.
In the last few weeks, I’ve written two very different stories about Deloitte. Both stories bothered me, but in different ways, so I was compelled to write about the firm both in unsympathetic and sympathetic terms. In the end, neither story says much about the state of the audit industry and the pre-2011 regulation of the audit firms.
It was a quiet almost-end to a sordid chapter in PwC’s history. Last week I wrote about PwC’s settlement of their Satyam class action lawsuits in New York for Forbes. Here’s some additional commentary and analysis, including links to all the stories I’ve written about the scandal since it broke in January 2009.
The Berkshire Hathaway Annual Meeting draws a huge crowd because it features several hours of the wit and wisdom of Berkshire Hathaway CEO and Chairman Warren Buffett and his friend and Vice Chairman Charlie Munger. To say that Buffett, Munger, and Berkshire Hathaway have a cult-like following would be a a significant understatement. I attended the meeting and here’s my report.
Stanford University Graduate School of Business Professor David Larcker and his research associate, Brian Tayan, have developed a case study on the recent David Sokol – Berkshire Hathaway corporate governance slip-up. They emphasize, “The success of this system is predicated on the expectation that Berkshire Hathaway managers operate with high levels of integrity.” I don’t think Berkshire Hathaway’s leadership defines corporate governance the way everyone thinks they do. The bigger question is: Should that matter to their investors or anyone else?
Here’s the speech and slides I used for the AAA Public Interest Conference on April 1-2 and Top X list of possible research topics for accounting and audit academics interested in public policy.
I’ll be at the American Accounting Association Midwest Conference in Columbus, Ohio May 12-14. I’m on a panel to discuss the audit firm model and will take questions at a separate session. Hope to see you there.
If you would like me to speak for your group, please email me at fmckenna@mckennapartners.com
It’s the potential for sudden conflagrations in developing countries that keeps the global audit firms – PwC in this case – up at night. The legal quagmires in developed countries are messy, too. PwC may want to put the Satyam scandal behind them but, unfortunately, I fear there’s still much more pain for the firm to come.
 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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