The Radio Station is throwing caution to the wind in the UK, accepting a new arrangement with Rentokil Initial, that brings out the ghosts of accounting scandals past. Under the new agreement, the firm will serve as both the external auditors and take on internal audit work, working alongside the client’s internal audit staff.
Prior to the new agreement with KPMG, Rentokil’s external auditor was PwC and internal audit services were provided by Deloitte.
Last we checked, audit textbooks still state that external auditors are to be independent in fact and appearance but KPMG UK must have got their hands on an edition that was printed in auditor bizarro world.
Rentokil’s KPMG deal raises eyebrows [FT.com]
Tag: Auditors
PCAOB Names Acting Mustache Chair
The PCAOB has announced Daniel Goelzer will be acting Chairman of the Board effective August 1. Goelzer brings an impressive resume with him, not to mention a sheriff-like mustache that will undoubtedly let the accounting firms know that he is not to be trifled with.
PwC’s New Investigation Will Invite Terrible Bovine Jokes
PwC has investigators all up in their grills again as another audit is going to be subject to an investigation. This time a sub-prime lender in the UK, Cattles.
Cattles is blaming the whole shitshow on a “breakdown in internal controls”, which has been the standard PR sound bite since before Enron.
The Accountancy and Actuarial Discipline Board (AADB), which regulates the profession, announced the inquiry on Thursday.The board, part of the Financial Reporting Council, said it would examine the conduct of PwC and its individual auditors concerning the preparation of financial statements of Cattles and Welcome Financial Services, its subsidiary, for the year ended December 31 2007 and for the six months ended June 30 2008.
According to one analyst referenced in FT Alphaville, Cattles was letting loans go 240 days delinquent before taking any impairment charges. Apparently PwC was okay with that practice.
And since the AADB is going to be looking at “individual auditor conduct”, what are they going to discover? Besides the partner and manager’s daily fat-cat lunches, obv. We invite your thoughts.
We’ve also got the feeling that this might be the type of engagement where you could include a high-def photo of the manager dry-humping the partner’s leg (wearing a leash and spiked collar, natch) as part of the audit workpapers and it would get signed off on anyway. But, like we said, it’s just a feeling.
UK watchdog opens probe into PwC audit of Cattles [Reuters]
Regulator probes PwC over Cattles audit [FT.com]
Center for Audit Quality Continues to Be Made Up of Firms Doing Bad Audits
Per Web CPA, the Center of Audit Quality has re-elected the four members of its governing board:
Ernst & Young chairman and CEO James Turley has been unanimously re-elected to serve a second term as chair of the governing board. Michele Hooper, co-founder of The Directors’ Council, and AICPA president and CEO Barry Melancon will extend their service as co-vice chairs. Harvard business administration professor Lynn Paine has been re-elected as a public board member.
BFD, right? Perhaps but it’s worth noting that the rest of the board is also primarily made up of representatives from large firms:
Crowe Horwath CEO Charles M. Allen, former SEC Commissioner Harvey J. Goldschmid, PricewaterhouseCoopers Chairman Robert E. Moritz (who replaced Dennis M. Nally on the CAQ board), Grant Thornton CEO Edward E. Nusbaum, Deloitte CEO Barry Salzberg, McGladrey & Pullen managing partner David R. Scudder, KPMG CEO John B. Veihmeyer (who replaced Timothy P. Flynn on the CAQ board) and BDO Seidman CEO Jack Weisbaum
In case you’re not counting, all Big 4 firms are represented along with BDO and Grant Thornton. That’s all well and dandy and I’m sure these guys could at least audit their way out of a paper bag but has it occurred to anyone that all these “representatives of the industry” work for firms that continue to have problems with AUDIT FAILURE?
The list is long of pending litigation but the firms don’t really seem to mind because they’ll claim TBTF. They have the AICPA set out this nice little group, focused on “audit quality” in order to put out press releases about the “work” they’re doing, meanwhile, audits still keep blowing up. Yeah, I guess re-electing the same people will be fine.
CAQ Governing Board Re-elected [Web CPA]
Partners at Grant Thornton are Just Getting Lazy
Grant Thornton is really making our lives easy today: “Grant Thornton has agreed to pay nearly £6,000 in fines and costs after it failed to correctly sign off 43 audit reports.”
Measly fine, obv but 43 audit reports? And a incorrectly signed off report is one that, “had not been signed off by a responsible individual of the firm”.
So apparently the Brits have got their interns signing off on the audits. Gold star for you today, GT.
ICAEW fines Grant Thornton over audit sign-offs [Accountancy Age]
Deloitte Throws Up its Hands Regarding Missing Gold
The Royal Canadian Mint (RCM) had a discrepancy between their book inventory of precious metals and the actual count, so natch, they called in a Big 4 accounting firm to do an audit and get to the bottom of this.
Deloitte got the honor of investigating and…wait for it…determined that there is gold missing. 17,500 ounces to be precise, worth about 15.3 million Canadian Dollars (approximately $13.2 USD). Oh, and there’s probably some silver missing too.
In classic auditor fashion, Big D issued a recommendation to the RCM to review its security.
Audit fails to find missing gold [BBC]
SHOCKER: Doesn’t Appear that Stanford Auditors were Doing Any Auditing
Last week’s indictment of Allen Stanford has brought up the always popular question when fraud, occurs: “Who are the auditors that were asleep at the wheel of this disaster?”
Well, in this case, the auditors were a local UK two-person shop, CAS Hewlett, which must be Queen’s English for Friehling & Horowitz.
It doesn’t appear that CAS Hewlett has a website, but they’ve been doing the Stanford “audits” for at least 10 years, so obv they’re legit. PwC and KPMG both have offices on Antigua but Stanford preferred to stay with its “trusted firm”. Totally understandable.
And the best part? The founder of the firm, Charlesworth “Shelly” Hewlett died in January, approximately a month before the story broke on the Ponz de Stanford.
This all adds up to who-the-fuck-knows if audits were even occurring and for us to speculate if Shelly needed to get got because Stan knew that the poo and fan were coming together. Just sayin’.