Prem Sikka has noted:
The FSA is seeking help from the "big four" accounting firms — Deloitte, PricewaterhouseCoopers, KPMG and Ernst & Young — for its investigation. This is a tacit admission that it does not have in-house capacity to understand the accounting practices of banks. It could not have diligently monitored the accounting practices of banks either before or since the crisis. By relying on consultants, the FSA is unlikely to build any institutional expertise and thus will not be in a position to efficiently monitor banks now or in the future.
These firms helped create the accounting policies that contributed to the banking crisis. They dominate the International Accounting Standards Board that has so far failed to address the issues the crisis has highlighted. The firms did not once give indication of the impending problem. They facilitated the shadow banking system by providing structures for its use, offshore in particular, and by assisting the process of securitisation in such places that allowed debt to be sliced and diced until no one had any idea what it meant.
And now they’re being paid to advise on the next steps.
It’s a very good sign that we remain in deep trouble.