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Comments on: Of auditors and ambassadors http://sharpener.johnband.org/2007/10/of-auditors-and-ambassadors/ Trying to make a point Fri, 25 Jan 2008 12:21:35 +0000 hourly 1 By: john b http://sharpener.johnband.org/2007/10/of-auditors-and-ambassadors/#comment-58881 Sat, 03 Nov 2007 12:24:05 +0000 http://www.thesharpener.net/2007/10/31/of-auditors-and-ambassadors/#comment-58881 They’re done to different /accounting/ standards, obviously.

However, all of the Big 4 firms have global compliance/risk management rules that member firms need to follow in order to maintain their affiliation, and which are checked and enforced (e.g. PwC kicked out its Japanese affiliate ChuoAoyama and started a new Japan firm after CA failed to meet its standards).

]]> By: atching Them, Watching Us http://sharpener.johnband.org/2007/10/of-auditors-and-ambassadors/#comment-58880 Sat, 03 Nov 2007 11:52:12 +0000 http://www.thesharpener.net/2007/10/31/of-auditors-and-ambassadors/#comment-58880 Is there any evidence that an audit in the Russian Federation is conducted to the same standards as one in in the UK, even if done by the same international firm of auditors ?

]]> By: Craig Murray http://sharpener.johnband.org/2007/10/of-auditors-and-ambassadors/#comment-58879 Fri, 02 Nov 2007 14:30:03 +0000 http://www.thesharpener.net/2007/10/31/of-auditors-and-ambassadors/#comment-58879 Mmmmm –

I think I am claiming that the problem with the audit system is that the (legal) person being checked on chooses – and pays – the person doing the checking. And that it is not difficult to imagine that auditors may not wish to enrage their clients and lose audit contracts worth millions of pounds, and that on occasion that may have led them to be less rigid than they should in applying thier professional standards.

I am not suggesting that any firm, or its employees, is particularly prone to this. No am I suggesting that accountants are any more crooked than the rest of the population. But it is a conflict inherent in the system which sometimes has led people – from all kinds of audit firms – to succumb to the temptation of being less rigorous than they should. And that the historical record does not beat out a contention that being audited by PWC is a particular safeguard against corruption on a large scale – I say again, Maxwell and BCCI.

The linked articles were only referred to as evidence that PWC or its predecessors were ineed the auditors of Maxwell and BCCI. I was not endorsing every last point made, let alone the general argument of the website on which they were found – although I must say they read fairly well to me.

]]> By: John B http://sharpener.johnband.org/2007/10/of-auditors-and-ambassadors/#comment-58878 Thu, 01 Nov 2007 18:32:34 +0000 http://www.thesharpener.net/2007/10/31/of-auditors-and-ambassadors/#comment-58878 1) In my reading, Craig uses the AABA’s criticism of the auditors to entirely dismiss their report as *evidence*, not just to point out that it doesn’t represent 100% *proof*. YMMV.
2) I’m charitably assuming that the post is following the AABA’s anti-big-4 agenda rather than defaming a single firm; I’ll continue with that unless Craig specifically suggests that he’s doing otherwise.

]]> By: James Cranch http://sharpener.johnband.org/2007/10/of-auditors-and-ambassadors/#comment-58877 Thu, 01 Nov 2007 18:25:48 +0000 http://www.thesharpener.net/2007/10/31/of-auditors-and-ambassadors/#comment-58877 1) He makes no such claim: I read it merely as stating that it is not proof of lack of crookedness.

2) The title does claim that, but the title of his post seems unrelated to the actual content of the post. Nevertheless, you are still putting some words in his mouth: you have substituted “Big 4″ for “PwC”: none of the 3 Big Others had been mentioned until you decided to start talking about them.

]]> By: John B http://sharpener.johnband.org/2007/10/of-auditors-and-ambassadors/#comment-58876 Thu, 01 Nov 2007 18:17:15 +0000 http://www.thesharpener.net/2007/10/31/of-auditors-and-ambassadors/#comment-58876 No. Craig is wrong on two counts:

1) He claims that being audited by a big-4 firm isn’t evidence of lack of crookedness. It isn’t proof of lack of crookedness, but it is certainly evidence of it.

2) He claims, by titling his post ‘bent auditors’, that big-4 firms are crooked. They aren’t.

]]> By: James Cranch http://sharpener.johnband.org/2007/10/of-auditors-and-ambassadors/#comment-58875 Thu, 01 Nov 2007 17:23:51 +0000 http://www.thesharpener.net/2007/10/31/of-auditors-and-ambassadors/#comment-58875 I do not consider that your restatement of Craig’s post “in other words” is an accurate account of what he seemed to be saying.

Craig claims that Usmanov claims that being audited by PWC implies you are not crooked.

Craig also seems to claim the statement that being audited by PWC does not imply you are not crooked.

The statement you are attacking is the converse: that being audited by PWC implies that you are crooked. This is indeed false, but it’s not the same as Craig’s statement.

It looks to me as if you have machine-gunned a barrel that you erroneously believed contained fish, having only inspected it in a hurry.

]]> By: John B http://sharpener.johnband.org/2007/10/of-auditors-and-ambassadors/#comment-58874 Thu, 01 Nov 2007 14:10:36 +0000 http://www.thesharpener.net/2007/10/31/of-auditors-and-ambassadors/#comment-58874 We need to distinguish between some different classes of statement here.
“there can’t be fraud because the company uses a top 4 auditor” – yes, unconvicing.
“a top 4 auditor has looked at this transaction and failed to find any trace of fraud, so it’s unlikely that this transaction was fraudulent in the way it’s being alleged” – rather more convincing.
“the top 4 auditors are bent” – false.
AIUI PwC has remained Gazprom’s auditor (based on shareholder votes) from 1997 to the present day, which suggests that an article that says some minority interests were unhappy with its performance five years ago may not be quite the smoking gun you’re claiming. I don’t understand quite how the whole Yukos mess happened, and it would require some serious research to get a decent view, so for the time being I’m going to follow my own advice and say nothing about it…

]]> By: Craig Murray http://sharpener.johnband.org/2007/10/of-auditors-and-ambassadors/#comment-58873 Thu, 01 Nov 2007 12:56:57 +0000 http://www.thesharpener.net/2007/10/31/of-auditors-and-ambassadors/#comment-58873 I think you are being a bit hyper-critical. Yes, I do know what auditors do. But the fact is that Enron, Polly Peck, Maxwell, BCCI and scores of others all had perfectly reputable auditors who with retrospect were over a period of years, at the most charitable, not very inquisitive, less charitably negligent, or in a more cynicl view quite happy to rub along in exchange for pocketing huge auditing fees.

I think you agree that the argument that there can’t be fraud because a company uses a top 4 auditor is unconvincing?

As I am sure you know, with a little more digging you can find some detailed criticism of PWC’s acceptance of some of Gazprom’s very dubious accounting
practices, and at Yukos too. Good link in a comment on my website.

]]> By: Devil's Kitchen http://sharpener.johnband.org/2007/10/of-auditors-and-ambassadors/#comment-58872 Thu, 01 Nov 2007 10:30:55 +0000 http://www.thesharpener.net/2007/10/31/of-auditors-and-ambassadors/#comment-58872 A very nice piece, John. Except that I read every word that Richard Murphy writes and therefore I know that the Big 4 are always, always crooked and corrupt.

Go, read him, see the light; they are eeeevil! Evil I tell you! And you know why? Because they tell their clients how to, quite legally, minimise their tax liabilities. Do you see?

Evil! Burn the Big 4 witches!

DK

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