The 'big four' accounting firms are set to reap fees running into millions of pounds for supervising the clean-up of the latest bank mis-selling scandal.
I understand that HSBC has hired Deloitte and Barclays has appointed KPMG to act as the independent reviewers of their sales of interest rate swaps to small business customers.
Hang on a minute? Who audited all these banks? Deloitte, KPMG and PWC, between them.
And who as auditors should have spotted mis-selling and LIBOR rigging, let alone the fact these banks were bust in 2007? Could it be Deloitte, KPG and PWC by any chance?
But who gets on the gravey train to sort out the mess? You guessed it.....
So it's heads you win and tails you win for the Big 4.
Time they were ruled unfit to audit banks instead, I say. After all, the evidence that this is true is plain for all to see.
Hat tip: Raj Thamotheram
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Richard you write:- “Time they were ruled unfit to audit banks ….”
But don’t complain to the ICAEW about the Big 4 as they are their bodyguards and an integral component in the great wall of silence that is robbing the public….
Who would you propose audit them then? Also, mis selling of interest rate swaps to customers is never going to feature as part of an audit no matter who audits them – surely this is the regulators responsibility?
I think audit has now to be a state regulated and maybe owned function financed by a levy on all companies based on a risk based formula
And mis-selling is an issue since it lead to liability risk
All audit it about liability risk at the end of the day
I was an auditor for 15 years
Miss-selling any product/service, including “interest rate swaps”, is a criminal offence, and obtaining money by deception carries a jail sentence of up to seven years.
The auditor has frequent admission into the heart of a company’s accounts
The regulator is not normally given this opportunity.
A company is an inert entity incapable of criminal thought or deed and is owned by the shareholders (company bank loans are secured by company assets acquired with shareholder’s capital). The company pays the auditors with capital provided by the shareholders (and banks). The directors are employees of the company and can be removed by the shareholders in a mechanism inherent in the AGM.
It is beholden on the auditors to provide the shareholders with an Annual Report on the company’s financial status. Any matters regarding monies appearing in the company’s accounts which give reason to believe they were obtained by deception should be reported to the police.
Failing to report a crime renders the auditor an accessory or accomplice to a Criminal Act.
And the ICAEW …. ?
If you were an Auditor for 15 years RM you should realise that the Audit is heavily dependent on the quality of management and internal contols. And you can’t cover everything- you would never finish. I think the Big 4 would lap up more regulation-that’s more fees. But who is gong to provide effective “State Regulation”? And who checks them?
I often agree with your analyses. It’s your potential solutions that have me worried.
You have a touching faith in the “State”- a mythical concept I feel, It’s like saying ” the fairies” have the answers.
When the profit motive is removed from situations where ethics are paramount then w would have an improved outcome
Hence my belief in the state