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…

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…

How an Agency You’ve Never Heard of Is Leaving the Economy at Risk

David Hilzenrath and Nicholas Trevino of the Project on Government Oversight have written a monumentally important investigative report on the failure of the agency set up following the Enron/WorldCom/MCI/HealthSouth and other accounting scandals to take exactly the actions it was designed for. There is a long Washington tradition of capture of regulatory agencies by industry,…

Time to tackle ‘Big Four’ auditors’ bad behaviour | Descrier News

The Carillion case is just one example in a string of alleged transgressions lighting a fire under the major audit firms, as British policymakers finally confront the need to crack down on the industry. KPMG is still haemorrhaging clients and staff after its extremely controversial work for the Gupta family in South Africa, whose close ties to former…