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.
Archive for the ‘Regulators, Laws, Standards, Regulations’ Category
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.)
The issue of tax avoidance by corporations is a hot one. In the US and in the UK, legislators and pundits seeking “tax justice” have changed the discussion from one of tax breaks that stimulate “jobs and growth” to one of tax fairness to provide much needed funds for public works and public commitments in times of economic hardship. The Big Four audit firms play all sides like a fiddle.
It’s easy to forget, with all the propaganda being published by major media, why these Fed/OCC consent decrees were issued in the first place. The fact that a borrower may be in default does not negate the overwhelming evidence that court cases have provided that banks proceeded fraudulently and illegally in some foreclosures and looted those borrowers and institutional investors in mortgage securities by charging fraudulent and illegal fees in the process.
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.
I was at New York University’s Vincent C. Ross Institute of Accounting Research to speak on a panel that included Paul Volcker, Bob Herz and a lawyer representing PwC and EY. The Ross Roundtable on the “Impact of Reemergence of Consulting Practices at Major Audit Firms” was well attended.
The SEC is busy chasing Ponzi schemers and foreign bribers. But bogus accounting remains a bigger danger to the markets. (More links.)
My column at American Banker last week focused on the latest PCAOB inspection report for KPMG. We’ve got three more “Big Four” inspections reports to come – Ernst & Young, Deloitte and PwC. Don’t be surprised if you see the same focus on loan loss and repurchase reserves and the same kinds of auditor deficiencies.
Jeff Connaughton’s new book, “The Payoff: Why Wall Street Always Wins”, is a must read during the Presidential election season.
Reuters has a story out today entitled, “Regulators tighten up bank in-house checks.”
Unfortunately it does nothing, in fact it distorts, the role of internal audit, external audit and the Audit Committee of the Board of Directors in a bank.