FT.com / Lex / Financial services & property - Accounting firms
FT.com / Lex / Financial services & property - Accounting firms.
The accountnacy firms are ona charm offensive. PWC spread considerable misinformation on country-by-country reporting in the Sunday Times. Now the FT says:
Accountants are enjoying a placid recession.
It adds:
Arguably, though, the most important asset accountants have maintained in this recession is their reputation.
In some ways it is surprising that the downturn has not notched up a big accounting scandal. The reasons are two-fold. First, firms and their auditors have become more conservative since the Enron and WorldCom accounting debacles. Second, Sarbanes-Oxley in the US and harmonised reporting standards elsewhere have forced greater disclosure requirements. With this has come more work for accounting firms. Indeed, strong recruiting has continued through the downturn.
No mention of Satyam for PWC.
No mention of the fact that PWC failed to notice Norther Rock was bust. Indeed, much of British and workldwide banking was bust.
It was auditor’s jobs to do that. They failed.
The model of Big 4 accounting has failed. We have not swept it aside. It’s another reason why another crash will happen sooner rathr than later.
Satyam was fraud over many years; PwC should have spotted that, but Northern Rock went down because of a liquidity crisis. Whatever the auditors may have thought about Northern Rock’s funding, and whatever they may or may not have discussed with the management, you can’t blame them for not flagging the issue in their reports when it appears the FSA was quite happy with the way NR was funded. They might have commented on whether appropriate risk management systems were in place but that is not the same as opining on whether the level of risk was too high, which is not really their job.