You know what sucks? Getting sued. Ask Bill Michael, KPMG’s UK head of FS. He’s pretty sick and tired of all the sue-happiness going on in the world today. Sure, the financial crisis nearly destroyed the world as we know it but dammit, blaming auditors is downright ludicrous. Why? Because it’s unfair.
Bill Michael, UK head of financial services at KPMG, attacked what he described as “unfair”, “deep pocket” lawsuits which pay “little or no attention to the balance of responsibility between auditor and management”.
“We operate in a highly litigious environment where the balance of risk and reward has driven us to a world of caveats,” said Mr Michael. “Any corporate failure or financial loss invariably carries with it the risk of suing the auditor.”
Right. Because in law school they teach future litigators to “pay attention to the balance of responsibility between auditor and management.” Supposedly Bill Mike would like everyone to start respecting the Big 4 business model and leave them alone to do their work. Because in case you hadn’t heard, this is a life and death matter for accounting firms, you know:
“I can tell you, we are acutely aware of risk management and its consequences from both an individual and a firm perspective.
“You only have to look at what happened to a great firm like Arthur Anderson after its audit of Enron,” said Mr Michael. Arthur Anderson was eventually cleared after its audit of the collapsed energy trader, but the accountancy has already folded as a result.
He also criticised the “enormous rewards for failure” in the banking industry, drawing attention to the way some of those responsible for the collapse of major firms were able to move to other banks or hedge funds.
“The risk-reward relationship is not only lop-sided; it impairs our ability to provide broader observations,” said Mr Michael.
Describing the sometimes tense relationship between accountants and the firms they are auditing, he said that each review often started with the premise of “we don’t trust you”.
So in other words, get your witch hunt on with the banks and hedgies but leave us the hell alone. Nobody likes us the way it is.
Litigation culture is ‘unfair’ warns KPMG accounting head [Telegraph]