“We are musicians, we hired the people who we thought were the best in the world. And he failed us.” — Georg Holm, bassist for the legendary Icelandic post-rock band Sigur Rós, said about the band’s accountant Gunnar Ásgeirsson, who worked at PwC. I’ve got a few Sigur Rós albums on CDs that I burned […]
How Dangerous is the Two-Billion Dollar Suit Against PwC Over Iceland’s Glitnir Bank? The Answer is Blowin’ in the Wind [Re: Balance]
In terms of a European financial laughingstock, prior to Greece, there was Iceland. Glitnir Bank (or what’s left of it) is suing its former chairman, CEO, other directors, and PricewaterhouseCoopers for their implosion last year.
For PwC’s part, one might think that since the lawsuit is in a country no one really pays much attention to, that it’s a bit of a joke. Well, that would not be so:
PwC faces a real lawsuit (for the complaint, here), in a real court – Manhattan’s New York Supreme – brought on behalf of the bank’s creditors and advised by Steptoe & Johnson and Slaughter & May – real lawyers who know their billions from their millions. Nor, any more than any of the other Big Four accounting firms, does PwC have the resources to absorb a ten-figure litigation blow (here).
Prosecutors Ask if 8 Banks Duped Rating Agencies [NYT]
Goldman Sachs, Morgan Stanley, UBS, Citigroup, Credit Suisse, Deutsche Bank, Crédit Agricole and Merrill Lynch come on down!
When the CAE is the bearer of bad news – and gets shot in the process [Marks on Governance]
What’s that saying about messengers? Chief Audit Executives (“CAE”) are often bad news messengers and talk about a thankless job. As Norman Marks tells us about one person that shared with three tricky situations with past employers:
In each of these situations I firmly believed that something that the organization was doing was highly unethical and/or not in the best interest of the organization, placing it at risk. Two of the organizations actually admitted that what was being done was in direct violation of the organization’s policies and in one situation state employment laws. In one situation I had my exit meeting with HR, and in the other two organizations only with the CAE.
In case you’ve misremembered, whistleblowers usually have a rough go of it, as Norman states, “All CAEs recognize that this is a risk, and in my experience they all accept it with full knowledge that their career at their company may effectively end with the delivery of the bad news.”
GAAP’s Lawsuit Buffer [CFO]
Some might argue that U.S. GAAP has a very distinct advantage over a more principles-based accounting system – lower litigation risk.
Of course companies could document the hell out of their “principles-based” conclusions to mitigate this risk but shareholders would likely still question their cockamamie reasoning. Now a recent study entitled “Rules-Based Accounting Standards and Litigation” is suggesting “that companies that violate rules-based standards have a lower likelihood of getting sued than those that are accused of violating more-principles-based standards,” giving the pro-U.S. GAAP contingent more to stand on.
The authors did admit that it’s difficult to conclude that principles-based would absolutely, 100% lead to more litigation due to our “unique litigation system” and the fact that we live in a sue-happy paradise.
Jesus, that was fast. After Wednesday’s snoozer raids at the E&Y office in Hong Kong, Icelandic police have raided the offices of KPMG and PwC in Reykjavik, Iceland, according to the Daily Telegraph.
More, after the jump
Police have raided the offices of KPMG and PricewaterhouseCoopers (PwC) in Reykjavik, seizing documents and computer data as part of an investigation into alleged criminal activity at three collapsed Icelandic banks…The office of Olafur Thor Hauksson, the Icelandic investigator charged with examining the collapse of
the three banks a year ago, confirmed that 22 policemen and six foreign accountants took part in the searches yesterday.
Six accountants? Whoa, this thing was way more serious. No coffee and bagel strategy here as it would have totally distracted the investigating accountants from their jobs.
Likewise, we doubt anyone was strapped for this raid. Especially the number crunchers. We can definitely picture them begging the police though, “C’mon, they don’t even have to be loaded. We’ll just leave them in the holsters. WE SWEAR.”
The most excitement that we can envision was some bean counter trash talk that may have escalated into open-hand slaps and flailing arms and legs. The real police, after enjoying this hilarious scene for a few moments, would have had no choice but to break up the nerd fight as it began encroaching on the investigation and other people’s personal space.
KPMG and PwC Reykjavik offices are raided by Icelandic police [The Daily Telegraph]