Archive for the ‘SEC’ CategoryThe Case of Valeant; Not Over By a Long ShotBy Francine • Nov 2nd, 2015Now that Valeant has cut off the gangrenous Philidor arm, we may never know the true extent of any accounting manipulation or fraud. And then again it may all come out when the rest of the organization is scrutinized. I’d say be prepared for big inventory writeoffs, or maybe even a restatement. Piling Up For PwCBy Francine • Nov 18th, 2014Update: The PCAOB is investigating PwC for its tax avoidance advice to Caterpillar, the Wall Street Journal is reporting. One down, more than 100+ PwC audit clients advised via Luxembourg to go… Auditor Independence: Another Case of Misplaced LoyaltyBy Francine • Sep 2nd, 2014Ryan Adams testified on behalf of PwC in an important court case. How can PwC be independent of Adam’s employer Marin Software, and Adams, the Financial Reporting Director at this newly public PwC-audited client company, if he’s testifying on PwC’s behalf in litigation that could impact PwC’s business model in California and, perhaps, nationally? US Department of Justice v KPMG: Document Shows “Too Few To Fail” Was Opening PremiseBy Francine • Apr 19th, 2014A new KPMG tax shelter era document surfaced, in original format, that had not yet been cited or quoted from in any media reports. The document tells us that late in the negotiations, June 27, 2005 the DOJ still would not agree to all of KPMG’s terms, including promising not to criminally charge the firm. But the decision to make sure the firm did not “go under” had already been made. KPMG and its Skadden attorneys only had to make sure the DOJ didn’t, in a misguided show of sheer aggressiveness, cause another Arthur Andersen. Not That Satisfying: SEC Slams KPMG For Independence ViolationsBy Francine • Jan 28th, 2014It’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. Early Returns: Scott London, KPMG and Another Partner Trading On Inside InformationBy Francine • Apr 15th, 2013This 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. E&Y, Their Audit Client Wal-Mart, and Value PricingBy Francine • Mar 23rd, 2013This 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.) At American Banker: Auditors Give Banks a Pass on ReservesBy Francine • Sep 9th, 2012My 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. Are Auditors Reporting Fraud And Illegal Acts? The SEC Knows But Isn’t TellingBy Francine • Feb 22nd, 2012There 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. A Closer Look At ClawbacksBy Francine • Oct 23rd, 2011The Sarbanes-Oxley Act of 2002 and Dodd-Frank’s clawback provision both require a restatement. The restatement of financial results to correct material errors – whether those errors occurred by default or by design – is a necessary condition for enforcing both the Sarbanes-Oxley Section 304 provision and the new Dodd-Frank law.
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Francine McKenna (@retheauditors) is the Transparency Reporter at MarketWatch.com, a Dow Jones publication, where her work is also featured frequently in the Wall Street Journal. McKenna had 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 before becoming a journalist. Look for her prior columns, 