Aleksander Poniewierski is a partner and a leader of IT Advisory Services over at EY Poland. EY writes, "[he] sets an excellent example of effective combination of professional career with private life and interests. Aleksander currently sells his photos, distributing money to charities – such as EY Foundation, which supports children in foster care."
This is his prize-winning entry in a National Geographic (Poland) competition "Lens of Development" in the category of "Democracy and human rights in development":
Read more about this amazing guy and his real commitment to work/life balance (read: having a job AND a passion for something other than work) here and waste some billable time admiring his amazing photographs here.
The PCAOB has issued its annual report on Ernst & Young having given the firm the third degree at its national office and 30 of its 80 U.S. offices. It inspected 58 audits performed by the firm but exactly who is, of course, a big secret (unless you tell us).
There were five “Issuers” that were listed in the report and some form of the word “fail” was used 25 times (that includes the footnotes).
[Issuer A] The Firm failed to adequately test the issuer’s loan loss reserves related to certain loans held for investment. Specifically, the Firm failed to reconcile certain values used in the issuer’s models with industry data, failed to test the recovery rates used in the issuer failed to test the qualitative components of the reserves.
Damn those loan loss reserves!
[Issuer C] The Firm failed to perform sufficient procedures to test the issuer’s allowance for loan losses (“ALL”). The issuer determined the general portion of its ALL estimate, which represented a significant portion of the ALL, using certain factors such as loan grades. Data for this calculation were obtained from information technology systems that reside at a third-party service organization. The Firm relied on these systems, but it failed to test the information-technology general controls (“ITGCs”) over certain of these systems, and it failed to test certain of the application controls over these systems. Further, the Firm’s testing of the controls over the assignment and monitoring of loan grades was insufficient, as the Firm failed to assess the competence of the individuals performing the control on which it relied.
This loan thing appears to be a trend…
[Issuer D] The Firm failed to sufficiently test the costing of work-in-process and finished goods inventory. Specifically, the Firm’s tests of controls over the costing of such inventory were limited to verifying that management reviewed and approved the cost allocation factors, without evaluating the review process that provided the basis for management’s approval.
Hopefully that doesn’t blow back on an A1.
Anyway, you get the picture. The whole report is below for your reading pleasure. E&Y’s got its $0.02 in, however it was short and was mostly concerned about the firm’s right to keep its response to Part II (the non-public part)…non-public:
We are enclosing our response letter to the Public Company Accounting Oversight Board regarding Part I of the draft Report on 2009 Inspection of Ernst & Young LLP (the “Report”). We also are enclosing our initial response to Part II of the draft Report.
We note that Section 104(g)(2) of the Sarbanes-Oxley Act requires that “no portions of the inspection report that deal with criticisms of or potential defects in the quality control systems of the firm under inspection shall be made public if those criticisms or defects are addressed by the firm, to the satisfaction of the Board, not later than 12 months after the date of the inspection report.” Based on this statutory provision, we understand that our comments on Part ii will be kept non-public as long as Part ii of the Report itself is non-public.
In addition, we are requesting confidential treatment of this transmittal letter.
So this doesn’t mean much other than E&Y would prefer that no one know how it managed to tell the PCAOB to fuck right off as nicely as it could.
We’ve got a follow up to our post yesterday about E&Y’s restructuring plans for the North Central and Pacific regions.
A source has informed us that the Financial Services Office (“FSO”) began nationalizing non-audit banking and asset management clients earlier this year. Insurance clients are also going to be under FSO, which will centralize all non-audit financial services clients. Our source has further indicated that the next step is to nationalize the audit clients. The ulitmate goal is to slim the firm down to five total regions (West, Central, Southeast, Northeast, and FSO).
We asked a couple of sources about this particular rumor to get some opinions:
I do hope this is not true, as [FSO] can’t audit their way out of a paper bag. I’m not sure why they would make an interim step as they’re making now if there’s an ultimate goal of five sub-areas
Another view:
Running FSO out of NYC seems like a good call from an overhead…cost standpoint but that’s about it. I have heard horror stories about the kind of hours FSO staff typically pull year round. I don’t see this making the “people in the trenches” any happier. Having all the work routed to one place makes it easier…to make sure that work is getting done…Of course I think this is just going to turn FSO into more of a meat grinder than it already is since they are going to do everything they can to get as much work in the pipeline as possible to keep that group busy.
As we mentioned yesterday, E&Y would not comment on internal firm matters.
If you’re in the FSO practice and can attest or refute any of the above details (horror stories, meat grinders, auditing out of paper bags) or even if you’re not and have an opinion share your thoughts below.
Before you go!
Are you Looking for a fresh accounting career opportunity?
Going Concern now has thousands of open accounting jobs.
