E & Y in trouble?

jimboddb

Well what ye reckon are Ernest & Young gonna suffer over the whole anglo debacle? Lots of share holders giving out stink after the EGM this morning.

ninty9er

People deserve rolling heads at E&Y as well as Anglo. €87m is a serious oversight, and would be practically impossible to miss if a single transaction. It also raises questions of the ability of E&Y to provide credible accounts to the market for any company, or to banks for unlisted companies and family enterprises.

Kine

Don't forget Nationwide, they were complicant also!

CaptainOats

I'm sure you've heard the saying....auditors are 'watchdogs not bloodhounds'.
If an effort was made to purposely conceal the transactions from Ernst and Young that would constitute fraud and the blame would not lie with EY...rather the corrupt people who colluded to conceal the money in the first place!

Kinetic^

The funny thing about this is, if it wasn't for the credit crunch you can be sure he'd still be switching his loans about. He probably went to switch loans this year and was told to get lost and had no other option then to come out about it.

Auditors will not pick up on everything.........but over 7/8 years and not to pick up on it is a bit much imo.

ninty9er

CaptainOats wrote: »

I'm sure you've heard the saying....auditors are 'watchdogs not bloodhounds'.
If an effort was made to purposely conceal the transactions from Ernst and Young that would constitute fraud and the blame would not lie with EY...rather the corrupt people who colluded to conceal the money in the first place!

I know it's a bank so €7.8m might not look big, but €78 or €134m?? There's also the Directors' Emoluments disclosure and the Assets and Liabilities Disclosures with specific regard to directors loans. Even if the loan didn't exist AT year end the highest level during the financial year would have to be disclosed.

crapmanjoe

EY probably will suffer in fairness but its probably not fair

As was already posted they send the Directors' Emoluments disclosure in good faith and there was no indication that they were sent incorrectly. Also new Anglo CEO announced in his speech this afternoon that EY had no knowledge of the loans.

Auditors work and give an opinion on a balance sheet as on the 30th Sept xxxx (anglo reporting date), not any other day, the loans werent on the books on that date

Even the cut off testing didnt catch the loans - why? Because the transfer tooks place before/after the generally accepted dates for cut off (10 days before/after year end). And even if they were caught, they are still less than 1% of the loan book and i would guess they wouldnt be material

In fact im pretty sure if PWC/Delloite/KPMG were asked they wouldnt recommend a prior year adjustment - because the loans werent material

I think this is damaging for auditors in general (and not just EY) cause Sean Fitz and obviously other bank board members knew exactly how to avoid detection
Keep the individual loans small and avoid the cut off testing - simple

And also how nationwide arent getting killed for this either i dont know!

As a final point - will EY remain as Anglo auditors? Or will there be a complete clear out of the old?

ninty9er

crapmanjoe wrote: »

EY probably will suffer in fairness but its probably not fair

As was already posted they send the Directors' Emoluments disclosure in good faith and there was no indication that they were sent incorrectly. Also new Anglo CEO announced in his speech this afternoon that EY had no knowledge of the loans.

Auditors work and give an opinion on a balance sheet as on the 30th Sept xxxx (anglo reporting date), not any other day, the loans werent on the books on that date

Even the cut off testing didnt catch the loans - why? Because the transfer tooks place before/after the generally accepted dates for cut off (10 days before/after year end). And even if they were caught, they are still less than 1% of the loan book and i would guess they wouldnt be material

In fact im pretty sure if PWC/Delloite/KPMG were asked they wouldnt recommend a prior year adjustment - because the loans werent material

I think this is damaging for auditors in general (and not just EY) cause Sean Fitz and obviously other bank board members knew exactly how to avoid detection
Keep the individual loans small and avoid the cut off testing - simple

And also how nationwide arent getting killed for this either i dont know!

As a final point - will EY remain as Anglo auditors? Or will there be a complete clear out of the old?

You make a good point, but maybe there's an argument a new set of principles specifically for the banking sector in addition to the specifics already existing. I'm looking at something not the same, but similar for my thesis at the moment.

If there's a whole new board, there's probably no reason EY can't continue, in addition it's probably better that they stay on as there will be more scrutiny of the books anyway.

Dave 2008

My understanding is that Ernst & Young have audited this 'bank' since year dot. This 'bank' has now, in effect, collapsed.

Ernst & Young will be fired as external auditor, no question about that. At the end of the day what went on was not chicken feed money, and indeed the practice of 'warehousing' would/should be on any auditors radar screen.

Even if they were unaware, as EY claim, they still have failed to spot a very large deception, with Anglo purposely deceiving shareholders (the very reason they - the auditors - exist is to provide shareholders with assurance that the books are not cooked).

A further note- given that this 'bank' is now nationalised there may be a case for the Comptroller and Auditor General to take on full auditing duties (the tax payers auditor) as it is very, very unlikely that this enterprise will exist in 5 years time.

The Anglo disaster will eventually cost Ireland tens of billions as its loan book is heavily impaired according to Brian Lucey, Trinity Lecturer, on The Last Word, Today FM 16/01/2009.

If you look at it from this angle, will the Irish firm of EY survive this? Will the lads in New York kick them out of the global firm?

After the collapse of Enron, Arthur Andersen went down the tubes. But then again that was the USA and this is the Banana Republic of Ireland.

And folks, Anglo is Ireland's Enron.

crapmanjoe

Dave 2008 wrote: »

My understanding is that Ernst & Young have audited this 'bank' since year dot. This 'bank' has now, in effect, collapsed.

Ernst & Young will be fired as external auditor, no question about that. At the end of the day what went on was not chicken feed money, and indeed the practice of 'warehousing' would/should be on any auditors radar screen.

Even if they were unaware, as EY claim, they still have failed to spot a very large deception, with Anglo purposely deceiving shareholders (the very reason they - the auditors - exist is to provide shareholders with assurance that the books are not cooked).

A further note- given that this 'bank' is now nationalised there may be a case for the Comptroller and Auditor General to take on full auditing duties (the tax payers auditor) as it is very, very unlikely that this enterprise will exist in 5 years time.

The Anglo disaster will eventually cost Ireland tens of billions as its loan book is heavily impaired according to Brian Lucey, Trinity Lecturer, on The Last Word, Today FM 16/01/2009.

If you look at it from this angle, will the Irish firm of EY survive this? Will the lads in New York kick them out of the global firm?

After the collapse of Enron, Arthur Andersen went down the tubes. But then again that was the USA and this is the Banana Republic of Ireland.

And folks, Anglo is Ireland's Enron.

http://www.boards.ie/vbulletin/showpost.php?p=58633744&postcount=5

First off I have to agree with Bairds post above, people going on about these loans (less than 1% of the loan book) being the cause of the down fall ought to be brought out and lashed

Enron actively cooked their books and received advice from Andersen on how to do it, Andersen then audited the accounts and gave their own advice the
thumbs up, so to compare Anglo/EY to Andersen is just and thats putting it very politely

Take a look at Anglos year end results -Anglo Results , that is the current affairs of the company

The big question is (and one i dont think any one can predict the answer) is how much are the loan assets on their books actually worth and how much will they be worth - thats the reason the bank is being nationalised not some "chicken feed loans" (and yes they still are chicken feed in the grand scheme of Anglos loans)

And 2 specific points about ur post

'warehousing' is on an auditors radar screen, which is why cut off testing is performed, but the audit opinion is 4 one day, would you like the auditors to gave an opionion for every day of the year?

Even if they were unaware, as EY claim, they still have failed to spot a very large deception,

The anglo chairman in his speech 2day said EY knew nothing of the loans

Hanley

crapmanjoe wrote: »

Auditors work and give an opinion on a balance sheet as on the 30th Sept xxxx (anglo reporting date), not any other day, the loans werent on the books on that date

Just on the balance sheet???

Even the cut off testing didnt catch the loans - why? Because the transfer tooks place before/after the generally accepted dates for cut off (10 days before/after year end). And even if they were caught, they are still less than 1% of the loan book and i would guess they wouldnt be material

I was under the impression that directors transactions within the company of any sort were by default material...

And also how nationwide arent getting killed for this either i dont know!

THat was the first thing I thought of when it all came to the surface a few weeks back....

And to the person comparing Anderson @ Enron to E&Y, c'mon....

LoveDucati2

Do we know who Audits Nationwide?

Seems to me the only people getting benefit from this will be the F*ckers who spent time in the tent in Galway.

MrMatisse

KPMG

Dave 2008

From the Sunday Business Post:

Shatter: shareholders could take civil legal actions

Alan Shatter, Fine Gael front bench spokesman and a former practising solicitor, said shareholders in Anglo Irish Bank may be entitled to take civil legal actions against the bank, former Anglo chairman Sean FitzPatrick, Irish Nationwide, auditor Ernst & Young as well as the financial regulatory authority.
.....

The Fine Gael TD said that Ernst & Young’s auditor’s report was also flawed and did not represent the true financial situation of Anglo - and that investors who bought shares on the back of these reports had a right to challenge them.

Ernst & Young has said that all of the audits conducted for Anglo Irish Bank shareholders were undertaken in accordance with the appropriate auditing standards.

The auditor said it was confident of all audit opinions expressed to Anglo Irish Bank shareholders in the bank’s financial statements and that the accounts showed a true and fair view of the state of affairs and results of the bank in accordance with the information and explanations received.

http://www.thepost.ie/post/pages/p/story.aspx-qqqt=IRELAND-qqqm=nav-qqqid=38911-qqqx=1.asp

Dave 2008

From the Sunday Business Post:

Anglo fiasco is Ireland’s Enron

Anglo Irish Bank is Ireland’s Enron, and those responsible for destroying shareholders’ assets should be pursued accordingly. It’s not just the shareholders: the system has also failed the people miserably. We are now in a position where nobody trusts us. The minute Anglo was nationalised, the risk on Irish government debt jumped significantly because this disaster will be paid for by all of us. Our national debt has just - effectively - doubled and dodgy banks are now contaminating everything associated with Ireland......

By David McWilliams

http://www.thepost.ie/post/pages/p/story.aspx-qqqt=DAVID+McWilliams-qqqs=commentandanalysis-qqqid=38862-qqqx=1.asp

ninty9er

Dave 2008 wrote: »

From the Sunday Business Post:



http://www.thepost.ie/post/pages/p/story.aspx-qqqt=DAVID+McWilliams-qqqs=commentandanalysis-qqqid=38862-qqqx=1.asp

It seems Davy boy has been spending a lot of time on politics.ie

I know it's essentially Ireland's Enron, but does our legislation match that of the US for allowing shareholder civil actions?

Dave 2008

Front Page Sunday Independent:

News of the Cabinet unrest comes as several leading legal firms in Dublin have confirmed they have begun discussions with Anglo shareholders about taking a class action against the bank's auditors, Ernst and Young, the Financial Regulator and possibly Sean FitzPatrick, the disgraced former chairman, and other Anglo board members.

http://www.independent.ie/national-news/anger-in-cabinet-at-volte-face-on-anglo-1606051.html

Hanley

How the fcuk is it Ireland's Enron? Other than not having something that should be on the balance sheet at the year end, it's not even close to being even remotely similar.

the1andonly1

the point is, that the accounts were correct - no loan existed at the balance sheet date, on which E&Y signed their opinion. even if they had discovered the loans, they weren't in place at the year end. Also, for a bank of Anglos size, they were probably not material.

Mr. Incognito

As part of the Audit process I presume the directors are required to sign statements detailing any loans they had from the bank. AFAIM the directors involved signed these statements and concealed the loans from E&Y.

In short, E&Y followed standard practices. I can't see any action suceeding against them imo.

This is just people annoyed blowing hot air looking around for people to blame. The blame should be rested squarely on the curropt little scheming bastards on the board that instigated these loans.

And why are we stepping in and saving Anglo? It's been a developers casino for the last twenty years.