Comments on: A history of audit failures http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/ Sat, 23 Mar 2013 13:49:31 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: DrRajT http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/#comment-920 Mon, 16 Jan 2012 18:09:23 +0000 http://blogs.reuters.com/david-cay-johnston/?p=187#comment-920 Why can’t we find common ground in this debate?

Perhaps its because “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

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By: Anonymous http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/#comment-708 Wed, 30 Nov 2011 13:42:08 +0000 http://blogs.reuters.com/david-cay-johnston/?p=187#comment-708 I retired after more than 40 years in the auditing profession with the same firm throughout starting off with a ‘big 8′ Firm and ending as a partner with a successor ‘big 4′ Firm. Approximately 85 percent of my career was spent in South East Asia. I take issue most strongly with the assertion ..” as many as 70 percent of auditors admitted to falsified audit work”. In my entire career, and I worked in an extremely large office during the last 15 years of my career, I have never falsified any audit work, been associated with any falsified audit work, or been aware of any falsified audit work in the various offices of the Firm where I was assigned.

Audit failures do of course occur, but I would suggest the reasons therefor are mainly due to lack of audit judgement/focus, notwithstanding the rigorous requirements of ‘big 4′ Firms’ specified audit methodologies or due to client collusion/fraud.

I note once again that I have retired from the accounting profession and that I do not have a guilty conscience or axe to grind based on my career in the such profession, which included numerous large, challenging audit assignments. I firmly believe that many authors of articles on this subject have never experienced any significant period in the audit profession or appreciate the professional challenge in getting ‘audits right’ throughout one’s career, as is in fact the case for the vast majority of audit partners and staff in ‘big 4′ Firms.

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By: smiller29 http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/#comment-589 Tue, 15 Nov 2011 19:06:58 +0000 http://blogs.reuters.com/david-cay-johnston/?p=187#comment-589 Government agencies are vulnerable to the same problems as the Big 4. A problem with the Big 4 is that most people work the long hours at these accounting firms to land good jobs at the clients. Much like the SEC preference of hiring accountants with Big 4 experience.

Having government conducted audits would just result in a greater degree of regulatory capture at agencies like the SEC and CFTC than already exist. The SEC itself has a poor history of not retaining required documentation of investigations that it has conducted. Last firm I heard of losing/shredding documents was Arthur Anderson.

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By: tonytinker http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/#comment-572 Sat, 12 Nov 2011 19:39:01 +0000 http://blogs.reuters.com/david-cay-johnston/?p=187#comment-572 David parting shot pleading for the auditors / regulators to clean up their act is, what sociologists like to call, “political voluntarism”. The Big 4 Accounting Firms are one of the largest lobbying groups in Washington. They are are the ‘regulated’ who basically own the regulators. Their law department out spend and out gun the SEC who constantly forced to settle for a ‘cease and desist’ order (which, incidentally includes a codicil that all records of an misconduct (often fraud) are sealed, to obstruct further private litigation, and deny Professors from conducting the equivalent of an autopsy to teach students how to ovoid a repetition of the ‘disease’.

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By: IanFraser http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/#comment-571 Sat, 12 Nov 2011 15:57:56 +0000 http://blogs.reuters.com/david-cay-johnston/?p=187#comment-571 Sorry. Not doing too well with links!! Correct links are as follows:-

Qfinance article 1 – http://www.qfinance.com/blogs/ian-fraser  /2011/01/24/accountancy-sacrificed-its- right-to-call-itself-a-profession-long-a go

Qfinance article 2 – http://www.qfinance.com/blogs/ian-fraser  /2011/07/07/accountants-who-dont-want-t o-be-conservative-or-prudent-are-serving -capital-markets-ill

Charlie Munger video – http://www.ianfraser.org/charlie-munger- getting-accounting-integrity-right-has-e normous-implications-for-future-of-manki nd/

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By: IanFraser http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/#comment-570 Sat, 12 Nov 2011 15:53:27 +0000 http://blogs.reuters.com/david-cay-johnston/?p=187#comment-570 Corrected version of comment:-

he astonishing inability of the audit profession to identify cooked books is deeply disturbing and is now putting capitalism itself at risk. How did the audit profession become so useless? I outlined some of the reasons in this Qfinance article, published in January 2011:- http://www.qfinance.com/blogs/ian-fraser   /2011/01/24/accountancy-sacrificed-its- right-to-call-itself-a-profession-long-a go

I followed that up with this article in July 2011 http://www.qfinance.com/blogs/ian-fraser   /2011/07/07/accountants-who-dont-want-t o-be-conservative-or-prudent-are-serving -capital-markets-ill

Finally, I’d also strongly recommend watching this interview with Berkshire Hathaway vice-chairman Charlie Munger, in which he likens the accountancy profession to a sewer http://www.ianfraser.org/charlie-munger- getting-accounting-integrity-right-has-e normous-implications-for-future-of-manki nd/

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By: IanFraser http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/#comment-569 Sat, 12 Nov 2011 15:51:05 +0000 http://blogs.reuters.com/david-cay-johnston/?p=187#comment-569 The astonishing inability of the audit profession to identify cooked books is deeply disturbing and is now putting capitalism itself at risk. How did the audit profession become so useless? I outlined some of the reasons in mu Qfinance article, published in January 2011:- http://www.qfinance.com/blogs/ian-fraser  /2011/01/24/accountancy-sacrificed-its- right-to-call-itself-a-profession-long-a go Also to watch a phenomenal and followed it up with this one in July http://www.qfinance.com/blogs/ian-fraser  /2011/07/07/accountants-who-dont-want-t o-be-conservative-or-prudent-are-serving -capital-markets-ill I’d also strongly recommending this interview with Berkshire Hathaway vice-chairman Charlie Munger in which he likens the accountancy profession to a sewer:- http://www.ianfraser.org/charlie-munger- getting-accounting-integrity-right-has-e normous-implications-for-future-of-manki nd/

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By: txgadfly http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/#comment-567 Sat, 12 Nov 2011 14:29:14 +0000 http://blogs.reuters.com/david-cay-johnston/?p=187#comment-567 None of these abuses were “invisible” — they were just “inconvenient” to auditor management. The managers who ignored them should simply go to prison.

If you do not want to be squeeky clean honest, do not work in auditing or in Government. As a country, we need to fill our prisons with white collar crooks and Government officials rather than marijuana smokers. There is no comparison whatsoever in the amount of damage to our country caused by the two groups.

Get tough with white collar crime or collapse. That is the simple choice. Prosecute, prosecute, prosecute! The laws are already there. If there is any part of our legal system that needs to go into the sewer, it is the doctrine of “sovereign immunity” (tell it to Louis XVIII). That simply invites criminals to have their wicked way with the people. It is a vile, vile concept.

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By: Indydog http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/#comment-566 Sat, 12 Nov 2011 14:18:19 +0000 http://blogs.reuters.com/david-cay-johnston/?p=187#comment-566 I tend to agree with OneOfTheSheep, however the GOP is doing everything they can imagine to gut regulations, eliminate enforcement, and defund oversight. I agree the SEC and other agencies need to do their jobs right, and auditors who allow cooked books need jail cells, but having our legislators undermining valid efforts is contempable.

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By: matthewslyman http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/#comment-565 Sat, 12 Nov 2011 08:54:22 +0000 http://blogs.reuters.com/david-cay-johnston/?p=187#comment-565 I once worked (as temporary agency staff doing data-entry) for a company that did nothing except statistical analysis of market penetration rates.

Their work was commissioned by the marketing departments of their clients (who had a vested interest in proving that they were succeeding in getting their company’s marketing brochures into the broader market). Anyone see a problem with this setup?

The company I was working for at that time had recently won the contract from a competitor, whose report had displeased the client’s marketing managers (they were “totally convinced” that the competing auditor’s report did not reflect reality). When the numbers came out showing that the competing auditor’s figures were accurate, my managers started looking for ways to make sure their new client would stay with them…

I was fired from that job for refusing to “cook the books”, to monkey with the numbers so as to please the people who commissioned the report. They got another temporary staff member to do it for them instead. After sending the “finished” report back to the client, the client called their new auditor on the telephone to say,
“Thank you for your report – your figures were exactly as we had expected. We shall be doing business with you again in the future [and not going back to our old supplier].”

Of course this market “research” auditing company (that defrauded Airtours, a UK travel agency, and their shareholders; and probably others as well); found some other excuse to fire me. They reported to my employment agency that I had some weird idiosyncrasies and that they wanted me replaced…

Nothing idiosyncratic about honesty, is there?

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