Archive for the ‘Independence’ Category

Not That Satisfying: SEC Slams KPMG For Independence Violations

By Francine • Jan 28th, 2014

It’s been almost three years since I first broke the story of KPMG’s loaned tax staff arrangement with audit client GE. On January 24 the Securities and Exchange Commission (SEC) announced an $8.2 million settlement with KPMG over violations of auditor-independence rules. The wheels of justice turn very slowly. But the GE case was not one of the three cited as the subject of the enforcement action.

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Early Returns: Scott London, KPMG and Another Partner Trading On Inside Information

By Francine • Apr 15th, 2013

This is the fourth big insider trading case in the least few years against a senior tenured partner that betrayed the public’s trust. In none of the cases did the firm’s “extensive” and “comprehensive” independence compliance programs spot the behavior or the illegal actions. Stay tuned. There will be much more to this story, I guarantee.

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E&Y, Their Audit Client Wal-Mart, and Value Pricing

By Francine • Mar 23rd, 2013

This post about Ernst & Young’s aggressive tax advice to audit client Wal-Mart was originally posted October 29, 2007. It’s worth everyone – I’m talking to you SEC and PCAOB – taking another look at this given Wal-Mart’s new Mexican bribery problems and the SEC investigation of Ernst & Young for tax lobbying to audit clients. (Ernst & Young has been silent and left out of most media discussion about Wal-Mart’s FCPA problems in Mexico and elsewhere.)

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PwC and Thomson Reuters: Too Close For Comfort

By Francine • Dec 26th, 2012

Here’s the thing…The perception of auditor independence is as important, or maybe even more important, than the fact of auditor independence. This is not new.

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Are Auditors Reporting Fraud And Illegal Acts? The SEC Knows But Isn’t Telling

By Francine • Feb 22nd, 2012

There are still many unanswered questions about how and why the financial crisis frauds occurred. New frauds, such as the Chinese reverse merger frauds, took advantage of a public listing loophole that the SEC and auditors missed. All these investor losses occurred under the supposedly watchful eyes of auditors, who are paid dearly to protect shareholders but in many cases are either complicit, incompetent, or both.

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Update: Mortgage Servicer Foreclosure Review Process

By Francine • Dec 27th, 2011

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.

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KPMG May Answer For GE Tax Work

By Francine • Sep 21st, 2011

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.

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McKenna Now Writing At American Banker

By Francine • Sep 16th, 2011

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.

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Inside The Mind of An Inside Trader

By Francine • Mar 5th, 2011

The SEC has accused one of the most prominent businessmen ever implicated in such crimes, Rajat Gupta, a former McKinsey & Company Global Managing Director, of insider trading. It’s understandable that, in the heat of this moment, some might naïvely compare the consequences of the criminal indictment of an audit firm with civil charges against an individual, albeit one who trades on – pun intended – his association with a prestigious professional services firm. It’s not the same thing.

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Auditor Independence: Will “Crisis” Cause Compromise?

By Francine • Aug 13th, 2009

Given the pressures on costs and the longstanding ties some finance, audit, and accounting executives have with the accounting firms, it is not surprising that the weakening of the independence commitment may come from the companies themselves. What’s the downside for them? The potential for scrutiny by corporate governance experts and journalists? You can’t argue with a recession. And in the event of an accounting scandal or restatement, plaintiff’s lawyers will have an uphill battle to penetrate the impenetrable auditor liability shields and caps.

What’s lost in all of this discussion of efficiency and cost cutting?

Independence protects shareholder’s interests.

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