Financial Times (December 9)
“The Big Four accounting firms have recorded their strongest financial performance since the collapse of Enron as corporate clients rushed to transform their businesses during the coronavirus pandemic.” Revenues soared to over $167 billion, collectively, in spite of “continued criticism of the structure and performance of the firms, especially in audits, including scrutiny of EY’s failure to identify fraud at Wirecard.”
Tags: Accounting firms, Audits, Big Four, Clients, Collapse, Coronavirus, Criticism, Enron, EY, Failure, Financial performance, Fraud, Pandemic, Revenues, Scrutiny, Transform
Financial Times (January 17)
Next week at Davos, “representatives of the Big Four accounting firms… are scheduled to meet Bank of America chief executive Brian Moynihan and other corporate leaders to thrash out green audit standards. Their decisions could be a crucial for the next wave of green reform as any eye-catching speech by Ms. Thunberg, since they will help direct capital flows.”
Tags: Big Four, BoA, Capital flows, Davos, Green audit standards, Leaders, Moynihan, Thunberg
Reuters (November 29)
“European investors managing assets worth more than 1 trillion pounds ($1.28 trillion) are pressing top auditors to take urgent action on climate-related risks, warning that failure to do so could do more damage than the financial crisis.” The investors assert that the Big Four audit firms “are not giving enough weight to a potentially rapid transition towards a low-carbon future as governments implement the 2015 Paris Agreement to curb climate change.”
Tags: Assets, Auditors, Big Four, Climate change, Damage, Europe, Financial Crisis, Investors, Low-carbon future, Paris Agreement, Risks
Financial Times (May 10)
The auditing sector is undergoing a “pitch battle” with new EU regulations that require companies at least tender their audits every 10 years and change auditors every 20 years. “So far the result has been a merry-go-round of audits swapping between the Big Four—PwC, Deloitte, EY and KPMG—which handle 98 per cent of FTSE 350 audits and 95 per cent of those for Fortune 500 companies.”
Tags: Auditors, Audits, Big Four, Deloitte, EU, EY, Fortune 500, FTSE 350, KPMG, PwC, Regulations, Tenders
Financial Times (July 29)
Regulators need to achieve “a complete redesign of audits and the way auditors deliver them.” Currently, auditors provide questionable value. “Did auditors give shareholders any advance warnings about failures and losses at Royal Bank of Scotland, Northern Rock, Anglo Irish, MF Global, Lehman Brothers, Bear Stearns, AIG or Barclays? US companies spend nearly $50bn annually on the ‘Big Four’ (PwC, Ernst & Young, Deloitte and KPMG) but the auditor rarely speaks or is questioned at annual meetings.”
Regulators need to achieve “a complete redesign of audits and the way auditors deliver them.” Currently, auditors provide questionable value. “Did auditors give shareholders any advance warnings about failures and losses at Royal Bank of Scotland, Northern Rock, Anglo Irish, MF Global, Lehman Brothers, Bear Stearns, AIG or Barclays? US companies spend nearly $50bn annually on the ‘Big Four’ (PwC, Ernst & Young, Deloitte and KPMG) but the auditor rarely speaks or is questioned at annual meetings.”
Tags: Audits, Big Four, Deloitte, Ernst & Young, KPMG, PwC, Regulators, Shareholders
Financial Times (September 26)
“The business model of the Big Four accounting firms is under attack from the European Commission, which is pushing for tough rules that would force the firms to abandon their consultancy businesses and share audit work with smaller rivals.” The draft legislation is hardly a sure thing and the Big Four will likely do all they can to fight it, but Michel Barnier, the EUs internal market commissioner, is supporting the legislation as way to restore confidence in financial reporting.
Tags: Accounting, Audits, Big Four, EU, Financial reporting
Bloomberg (December 22)
Just weeks before being sued for its role as auditor of Lehman Brothers, Ernst & Young (E&Y) was advertising that it could help companies identify “new risks related to fraud and corruption.” A Bloomberg editorial agrees that “E&Y may have lots of experience in this field,” but adds it’s the wrong kind of experience. “It’s indisputable that E&Y blessed Lehman’s financial statements quarter after quarter, year after year, falsehoods and all.” The problem is all of the large audit firms have had the wrong kind of experience. “Killing E&Y or any of the other Big Four audit firms — PricewaterhouseCoopers LLP, Deloitte & Touche LLP and KPMG LLP — would leave just three large survivors, when the industry has too few competitors already.”
Tags: Big Four, Ernst & Young, Fraud, Lehman
