Brilliant revelation by PCAOB: CFOs are in charge of the numbers
It’s no secret that I feel that audits are almost completely ineffective when it comes to verifying the validity of financial statements. Sure, an audit checks the math and some of the obvious applications of the accounting rules. But audits don’t guard against fraud and usually don’t find fraud.
Those who want audits to do that [...]
Wondering why frauds at public companies aren’t being pursued by the Feds?
Consumers are often left wondering why the Securities and Exchange Commission doesn’t heavily pursue allegations of fraud against public companies like Overstock.com (NASDAQ:OSTK), Usana Health Sciences (NASDAQ:USNA), Herbalife (NYSE:HLF), and the like. I’ve always said the answer is simple: There are not enough resources devoted to investigating and prosecuting fraud in public companies. Executives are [...]
Should Big 4 audit firms release their financial statements?
A few months ago, a committee advising Treasury Secretary Henry Paulson on the “state of auditing” recommended that Big 4 audit firms be required to submit audited financial statements to the Public Company Company Accounting Oversight Board (PCAOB). It’s suggested that the firms be required to report their financials in accordance with Generally Accepted Accounting [...]
Lehman collapse looming in June: When did auditors know?
The current issue of New York Magazine has a lengthy story about the collapse of Lehman Brothers. To cut to the chase: Management knew in June that the company was in serious, serious trouble. Which leads me to ask when their auditors knew?
Why audits are near worthless (yes, internal audit too)
Francine McKenna at re: The Auditors has an interesting post and set of comments about internal audit functions at public companies and the importance of internal auditors.
External auditors look at a company’s financial statements and a small amount of underlying transactions in order to issue a report that the financial statements are properly presented. (It’s [...]
Auditor liability in market meltdown?
It should come as no shock to anyone that lots of fingers are being pointed related to Wall Street’s meltdown, and specifically related to the banking industry. And auditors are likely to find themselves the targets of lawsuits. Auditor malpractice is often hard to prove, but in this case, I think there will be several [...]
Overstock.com: What’s $10 million more in losses?
You can be sure of two things when looking at Overstock.com (NASDAQ:OSTK) financial statements:
They’re wrong
There are massive losses (which will be even bigger when #1 comes to light)
Fox Guarding the Henhouse: Big 4 auditors chosen to oversee Bailout Bill
PricewaterhouseCoopers LLP (PwC) and Ernst & Young (E&Y) have been chosen by the United States Treasury to help oversee the $700 billion bailout plan. CFO.com reports:
But Sarbanes-Oxley hasn’t actually reduced fraud…
My friend Francine McKenna wrote yesterday on her blog, re:The Auditors, about what Sarbanes-Oxley has accomplished:
My contention is that Sarbanes-Oxley has at least raised the tone and tenor of the conversation about internal controls and about common sense, tried and true, reasonable practices for financial reporting to shareholders and other stakeholders. Sarbanes-Oxley has raised [...]
Deloitte & Touche: It’s good to be partner.
There are many things wrong with the Big 4 accounting firms, and I predict that within 3 years (probably less) they will all be gone. But the partners are going to stay on the gravy train as long as they can.
Make no mistake: Being partner at a Big 4 isn’t easy. It takes a lot [...]
