PCAOB Board member J. Robert Brown, Jr. spoke to ICGN about audit disclosures and ESG. An excerpt (footnotes omitted): I’m guessing that when you think about Environmental, Social and Governance or ESG disclosure, audit regulators are not usually top of mind. Today, though, I want to share some thoughts about why they should be. The…
Category: accounting
Our Audit of EY’s Apology for Wirecard Finds it Inadequate
Note use of passive voice and that faintest of excuses: it was really, really hard. Not acceptable when the auditor’s primary job is to verify the company’s accounts, and that included detecting fraud. “Many people believe that the fraud at Wirecard should have been detected earlier and we fully understand that,” Mr Di Sibio wrote…
SEC Report: U.S. Investors’ Exposure to Domestic Chinese Issuers
The accounting fraud at Lukin Coffee is just the latest reason to raise concerns about investment risks in Chinese companies. The SEC has issued a new report that includes the exposure of the biggest pension funds in the UA. Excerpts here (footnotes omitted), full report below. More than 150 China-based companies with a combined market…
Short-selling – Wirecard’s scandal shows the benefits of short-sellers | Leaders | The Economist
Wirecard’s rise and fall is a case study in the carnage possible when a firm’s accounting goes awry but national regulators and big investors are so seduced by the company’s narrative that they cannot, or will not, see it. It is also a reminder of how markets stand to benefit from short-sellers—who try to make…
The economic crisis will expose a decade’s worth of corporate fraud | The Economist
Booms help fraudsters paper over cracks in their accounts, from fictitious investment returns to exaggerated sales. Slowdowns rip the covering off. As Baruch Lev, an accounting professor at New York University, puts it, “In good times everyone looks good, and the market punishes you harshly for not keeping up.” Many big book-cooking scandals of the…
Congress Gets Involved in Accounting Rules (Again) – The Dig
As part of the CARES Act, the coronavirus-relief measure enacted in late March, Congress is allowing banks to hold off on adopting a new method for them to record their losses on loans that aren’t repaid. The new rule – known as “CECL,” for current expected credit losses – forces banks to book and reserve…
CII Letter to SEC about PCAOB and China
The Council of Institutional Investors has written to the SEC to raise concerns about plans to cut back on investor protections and accounting oversight. The full letter is below. An excerpt (footnotes omitted): [We] respectfully request that the PCAOB investigate the matter to the extent possible and determine whether it is appropriate and in the…
Measuring What Matters
There is a groundswell of interest in metrics that go beyond our traditional financial view of companies. Many organizations have done extensive work on frameworks for ESG metrics, non-financial metrics, or integrated reporting, each targeted at a range of stakeholders including customers, employees, policymakers and investors. The challenge we often hear is that companies work…
Changing the Timeline on Corporate Financial Reporting: SGX Scraps Quarterly Updates – Glass Lewis
he Singapore Exchange Limited (“SGX”) announced that it would change its reporting regimen to remove the requirement for quarterly earnings reporting to instead only require half-yearly reporting. The change provides for risk-based exceptions, which require certain companies to continue quarterly earnings reports if: A company received a disclaimer, adverse or qualified opinion from its auditor…
EY, Deloitte, KPMG fall short in audit quality
Underscoring our point in the previous post that the inadequacy of traditional financial disclosures is the reason for the interest in ESG/sustainability: Three of the big four consulting firms failed to do enough work to support their audit opinions on every important aspect of at least one client’s financial reports. The corporate regulator’s latest audit…
ValueEdge Advisors 