Anybody see Frontline on RTE

JD Dublin

Did anybody see the accountant guy on Frontline last night? If you are an accountant you will be paying for this with extra subscriptions for years to come while we pay to investigate these guys. If you are in practise you will be paying extra Professional Indemnity Insurance. If you are a taxpayer you will be paying for these guys carry on for the next 20 years in increased taxes.

What is going on that these guys are going to walk off scot-free after signing off audit reports on Anglo Irish?

loveacca

The auditors must be apportioned some of the blame however the main culprits are the directors. Resolving responsibility will revolve around the amount of trouble the directors went to to hide the dodgy loans (and other matters). If the directors conducted an excellent operation in the hiding of the loans, unlikely I suppose as they made a mess of everything else, then the auditors may have an escape avenue. However if the loans were glaring at them the auditors will have a serious problem

censuspro

I put up a poll about this in another thread.

Unfortunately you won't get too much debate on this forum. Most of the posters on here are students employed by the Big 4 firms.

dbran

Hi

The auditors clearly have some very difficult questions to answer. And i don't believe the representative from ICAI gave a very good account of either the profession or his institute that he was supposed to be representing. He came across as being very glib and almost trying to defend what is clearly indefensible.

However on the other hand Pat did display a lack of knowledge of what an audit actually is and was clearly going for the sensationalist viewpoint rather then the one based in reality.

The audit cannot be a review of every single transaction that an entity enters into. Especially if there is an active campaign by the directors and other internal machinery of the company to conceal the true nature of the transactions from the auditor. If it was, I do not think anyone in their right mind would ever want to be an auditor, never mind put their name to an audit report.

Just my 2c though.

Dbran

P.S. Im not from the Big 4 but am a registered auditor:)

everyday taxi

I watched it. It further strenghtened my view that big business wins every time. None of the politicans, bankers, solicitors, auditors, developers will be punished for the mess they've left. Our sad little countries attempt to get justice involves nothing more than inquiries, which cost us more money and take forever into the bargain, all at which the end result is "oh this is why it went balls up, we better not make those mistakes again". The guilty just walk away. How many millions has the moriarty shambles cost us, and its still rumbling on 14 years later!! Who was handed justice from that? Its all balls, every man for himself i say. Oh yeah and, REVOLUTION!!!!

sflemings

censuspro wrote: »

I put up a poll about this in another thread.

Unfortunately you won't get too much debate on this forum. Most of the posters on here are students employed by the Big 4 firms.

Surly if they're employed they shouldn't be on the internet during the day (like me obviously)!!!!!!!

I'm not an auditor and never have been. I agree that a lot of the discussion around what happened is academic at this point as it has already happened. One good point that was made on the programme is that what constitutes an audit and the duty of care involved should be redefined in the light of what has happened so that items that were overlooked and dodgey practices ignored / not picked up will / would be in the future. I do agree that the ICAI guy was annoying defensive and unwilling to concede that any error was made on the part of the auditors.

Pisco Sour

The chap from the ICAI gave the worst defence I have ever seen. By saying "is the audit useful? Is it meeting people's expectations?" he has made all his other points null and void and has admitted what everybody else already knows - that independent auditing is pointless and achieves nothing.

censuspro

There are two fundamental issues that Ernst & Young, the auditors of Anglo need to be asked.

1.The directors loans of €180 million to Sean Fitzpatrick
2.The transfers of €7 billion to IL&P

If E&Y knew of these transactions why did they not report them, or if they didn’t know about theses transactions, why not?

There are very specific company law AND specific tax legislation in relation to directors loans. Prior to commencement of an audit, an audit plan is carried out and level of risk is ascertained. The most obvious level of risk when auditing a bank is the loan book because that is what a bank does, it lends money. The first thing the auditor of a bank should ask for is confirmation of directors’ loans and the directors sign a personal letter to the auditors confirming the amount of the loan. If it’s a case that the auditors were given false information then that in itself is an indictable offence and surely that is evidence of fraud on behalf of the directors. If it is a case that the auditors knew and didn’t report the directors loans then that is negligence on behalf of the auditors.

Posters on here argue that an auditor cannot check every single transaction, which is true. However, €7 BILLION is a large sum of money and surely these large sums would have been noticed. Others will say it was done after the year end when the audit was finished, however one of the requirements of an audit is to check PBSE’s (Post Balance Sheet Events) to see if there are any transactions after the year ended that would materially effect the financial statements. Even if this exercise was carried out and it was missed, it would have showed up in the audit the following year.

To make matters worse, E&Y have now been appointed to advise NAMA on loan valuation services. PWC have been appointed to NAMA to provide tax advice and KPMG have been appointed as auditors. All of these firms have done audit and consultancy work for Irish banks not only that, their clients are the same developers who are having their loans books transferred to NAMA!!! So within the same accountancy firm they are advising Liam Carroll and Bernard McNamara regarding their personal finances and at the same time they are advising NAMA on what to do with the loans. A blatant conflict of interests. You could not make this up.

Mr. G.

It gets worse: this guy says that 'there was a small pool of advisers in Ireland and all, to a greater or lesser extent, were involved with the banks. “None can wriggle away white':
http://www.irishtimes.com/newspaper/finance/2009/0620/1224249188832.html

secman

One of the main problems is the Auditors Independence, they really are not Independent. Its a difficult one to attain, as you are effectively working for the Company being Audited, you do not want to lose a good fee paying client.
I presume that Paul Appleby will be very very busy over the coming months. Anyone who was a Director of an Institution that had to write off huge Bad debts were hardly performing their duties to safeguard the assets of the Comapny on behalf of the shareholders. I presume all past Directors are nervously watching thier post box !

Secman

dbran

secman wrote: »

One of the main problems is the Auditors Independence, they really are not Independent. Its a difficult one to attain, as you are effectively working for the Company being Audited, you do not want to lose a good fee paying client.
I presume that Paul Appleby will be very very busy over the coming months. Anyone who was a Director of an Institution that had to write off huge Bad debts were hardly performing their duties to safeguard the assets of the Comapny on behalf of the shareholders. I presume all past Directors are nervously watching thier post box !

Secman

This is true but there should have been safeguards put in place by the firm that should reduce or eliminate the risk to their independence to an acceptable level. Were these safeguards actually in place? Did they work effectively? If not then EY should not have accepted the audit assignment. Why did they accept the audit? Will we ever get to know?

On another note, I would also point out there are a lot of auditors in the country who do their best in a difficult environment and actually do take what they sign off seriously.

If it does transpire that there has been serious malpractice, it would be unfair to tar us all with the same brush.

dbran