EY gets banned from new audit business in Germany

https://www.economist.com/business/2023/04/05/ey-gets-banned-from-new-audit-business-in-germany

by mfiguiere • 3 years ago

471 272 3 years ago

economist.com

morsch• 3 years ago

(for two years)

helsinkiandrew2• 3 years ago

https://archive.is/RiaMV

jll29• 3 years ago

If a CEO mismanages and goes bankrupt, they cannot start another company for 5 years; a two-year ban seems mild, but better than nothing, as the reputational damage is substantial (why would any non-criminal pick EY afterwards in good faith if there are others?).

helsinkiandrew2• 3 years ago

As well as a €500K fine, five employees were also fined between €23,000 and €300,000. And seven others escaped punishment by handing back their auditor’s licences.

I’m not sure many reputable public companies will be queuing up to use their services in 2 years time

hef198988• 3 years ago

If a certified and liscenced auditor in Germany returns his liscence, well, that person just ended their professional career. So the alternativr seems to have been considerable worse. Rightly so, Wirecard was a fuck up of epic proportions.

ck452• 3 years ago

It would be an interesting idea to make auditors fully accountable like bankruptcy advisors. I know, this is never going to happen.

angus-prune• 3 years ago

The current problem is that the insentives are all wrong.

It is the company being audited that gives the auditers the business. Its not in the interests of a dodgy company to appoint a good auditor, and its not actually in the auditors (short term) interest to uncover wrongdoing as it just means they'd lose a client.

My proposal is that you require every company to have insurance to cover the risks, making the insurers fully liable for fraud (and any other business risk that audits protect against).

Companies then don't appoint their own auditors, but the insurers do. Its in the insurers interest to make sure that any audit is effective as they're on the hook for any liability the audit misses.

This way the insentives for the auditors are aligned with the interests of the people relying on the audit (shareholders, customers, suppliers).

shortrounddev• 3 years ago

Really? 5 years? That seems really harsh. Is it all business failures or does it have to be due to mismanagement? I've heard the climate is very hostile to businesses in Germany; my sister in law was trying to sell art on etsy and apparently she had to get a business license to do so in Germany. She's now back in the USA where she can just sell stuff online and the only thing she needs to do is file her taxes correctly

ChuckNorris892• 3 years ago

she had to get a business license to do so in Germany. She's now back in the USA where she can just sell stuff online

If you want to sell in the Germany, get a business license from Estonia or Romania or some other low-cost low-bureocracy EU country, and pay your taxes there. Germany is still living in the business climate of the '60s.

charlieyu12• 3 years ago

You know, all regulations only hurt small sellers, people at the “top” always get away from all the crap they are directly responsible for, no matter they are hurting their own business or the society as a whole

mantas2• 3 years ago

Can’t speak about Germany for sure, but usual euro way is you don’t need to do taxes at all if you do not run a business. Employer fills it for you. And getting a doing-business-as-individual is as simple as filling a form at revenue service website telling you’re starting a business. Then you get a tax ID to put on your invoices next day.

If you sell as an individual, it’s just you selling random stuff that you don’t need to pay taxes for. Once you do this as a business, you declare it as such and notify the state about it.

belter2• 3 years ago

Many other countries have similar laws. Normally get's solved by buying an existing business...

avianlyric4• 3 years ago

Really? 5 years? That seems really harsh. Is it all business failures or does it have to be due to mismanagement?

There’s a big difference between bankruptcy and business failure. Plenty of businesses fail without entering bankruptcy, they’re wound down responsibly and their creditors are repaid in full.

If a company fails due to bankruptcy, then it means that people who lent money to that business are out of pocket, and end up paying for the failure.

The whole point of “limited liability” companies is that the owners and management are shielded from creditors in the event of bankruptcy (hence the “limited liability”). So a five year ban (which is true in most countries) from directing another limited liability company is reasonable, it don’t prevent your from running a business, only from running a limited liability business, because there’s now evidence that in the event of failure you’ll leave your creditors high and dry.

Ultimately the privilege of running a limited liability company, where the state promises to protect you from your creditors if things go wrong, is just that, a privilege. If you prove yourself unable use that privilege responsibly, then that privilege is temporary taken away. To be clear, the privilege removed is protection from creditors by the state, if your business fails. You can absolutely start another business, it’s just that the state won’t protect you if you fail.

simplotek2• 3 years ago

Really? 5 years? That seems really harsh.

Bankruptcy is not a mild consequence. People can and often are ruined by a bankruptcy, not to mention the harsh impact that it has on employees who are suddenly forced out of a job. Declaring bankruptcy should not be considered as something mundane or yet another run-of-the-mill managerial decision.

Also, not being able to found a company is not what I would call "harsh". Even in a purely capitalist view of society, a entrepreneur needs to focus on ventures to ensure they are successful, and "failing fast" does not mean it's ok to file for bankruptcies.

brookst• 3 years ago

So as a super talented CEO, would you take any jobs trying to save a failing company?

ck452• 3 years ago

The wirecard scandal on Wikipedia: https://en.wikipedia.org/wiki/Wirecard_scandal

wjnc2• 3 years ago

Look, these sentences are probably more than just and even on the light sight. Handing in your auditing license is a pretty severe punishment, at least career changing. But will the risk and audit professionals at BaFin face the same penalties?

everybodyknows• 3 years ago

If they do, they'll be tempted to rat out the political overlords who dictated the "see no evil, hear no evil" policy.

lima2• 3 years ago

The head of BaFin and their deputy were forced out over it and the agency is undergoing significant restructuring[1], and a new agency was formed specifically for investigating financial crimes[2].

In terms of actual liability - no, at least not yet. A number of lawsuits by individual investors were thrown out[3] but it's possible there will be public prosecution:

Criminal prosecutors in Frankfurt are assessing whether BaFin employees obstructed justice by not properly investigating fraud warnings.

In the end, it's a regulator, they have to rely on auditors to some point. If Wirecard lies and EY doesn't catch it, that's on the criminal and the auditor. Still, it's hard to understate just how badly the agency fucked this one up... Hopefully, it'll serve as a true wake-up call.

Certainly seems like it - they have been more aggressive recently with other problem companies like N26, Solaris Bank, Coinbase, Deutsche and others.

[1] https://www.ft.com/content/4f948457-678e-485c-92f7-2837064a5...

[2] https://www.ft.com/content/587b6c52-c93e-4b2c-949a-53f6a1667...

[3] https://www.ft.com/content/9fab6842-4ee6-4114-a35c-09bf9c62a...

stametseater• 3 years ago

The head of BaFin and their deputy were forced out over it

They tried to get innocent people put in prison. They belong in prison themselves. If all that happened to them was losing their careers, then they haven't been brought to justice.

wjnc2• 3 years ago

To reply to just one sentence: From my experience the relationship between auditors and financial (prudential) regulators is only lightly one of relying upon. On the one hand of course having trouble getting your financial report signed is a key risk indicator for the regulator, on the other hand the regulator in my sector (insurance) goes markedly deeper in their thematic and on-site reviews than the auditors do. Even though the auditors sign off on things like capital requirements, the regulators understand models way better. Those building proper models usually don’t work for the big-4 that do auditing, but work for more niche firms and the insurers themselves.

I’ve worked for a regulator in a sector with more lenient oversight (health) and there the accountant was one of the pillars of our understanding. We just didn’t have the mandate or capabilities to understand the finance of the thousands of providers. In that way regulating finance is easy. Banks and insurers are relatively low-N activities. In case of BaFin I find it hard to imagine that they couldn’t, so they probably wouldn’t.

Food for another thread is how to match the European perspective above to, say, the SVB case in the US. How on earth the regulator didn’t track the interest rate risk is beyond me. (I believe the legal explanation is that they fell in a D-F regime with less regulatory burden.)

fauigerzigerk• 3 years ago

BaFin's role in this is indeed pretty astonishing:

"The German financial watchdog has filed a criminal complaint against two Financial Times journalists and several short sellers, accusing them of potential market manipulation over reports about suspected accounting irregularities at payments processor Wirecard."

https://www.ft.com/content/8e1948be-6060-11e9-b285-3acd5d435...

FabHK2• 3 years ago

Indeed, they failed big time. Apparently some BaFin employees were also trading the shares of Wirecard (and presumably other companies they were supposed to oversee).

There's a pretty good book on the whole sad story: Money Men: A Hot Startup, A Billion Dollar Fraud, A Fight for the Truth by the FT journalist that did most of the digging.

If journalists and short sellers hadn't kept pushing (against Wirecard, auditors, and BaFin), Wirecard might have survived a bit longer, managed to acquire Deutsche Bank, and then (with the merged balance sheet) gotten away with it. Mind boggling.

However, I must say, after reading that book and several articles about the whole thing, I am still not quite sure how they could keep up the fraud for so long, what exactly happened there, and who benefited.

(I suspect that crypto firms have taken over a lot of Wirecard's "business"...)

rvba2• 3 years ago

Audits in general are such a joke. Rubber stamping and checks done by students or graduates who barely understand what they are doing. And even if they detect something, it is considered as not material and ignored.

From business perspective the auditors are clueless.

I dont claim that audits are bad, they are very needed. But the execution in many ways is so poor.

fnordpiglet4• 3 years ago

All audits should be disclosed in giant black letter on the front “PAID FOR BY THE AUDITED COMPANY”

The conflict of interest in external audit is absurd. It’s similar to securities rated rating agencies paid to rate the instruments by the issuing company.

cjbgkagh3• 3 years ago

The audited company often buys consulting services from the auditors which in effect is an extra incentive on top of the moneys paid for the auditing service. The mechanism that allows this is the ‘Chinese wall’ but that is a total joke. What really need to happen is to separate out consulting from auditing. That’s not going to happen though as there is just so much money is consulting.

b0afc375b5• 3 years ago

As a former CPA/External Auditor this fact confused me the most. No amount of disclosure will avoid the reality that the food on my table (audit fee) depends on the clients I am supposed to be impartial to. This system seems blatantly idiotic to me.

throwaway18875• 3 years ago

I once worked at a small pen-testing firm that also conducted PCI DSS compliance tests, and I can confirm that this is an accurate depiction of the industry. A majority of the staff were recent grads, and it was disheartening to see that most clients were primarily interested in obtaining the compliance certification rather than genuinely improving their product security. This, in turn, creates a perverse incentive for auditors to grant compliance, as clients who don't get the desired outcome may simply switch to a different auditor. In such a setup, it's difficult to ensure that security standards are genuinely upheld. On a positive note, these compliance tests do help in making sure that card data isn't stored in plaintext, but beyond that, the overall impact on security seems rather limited.

Jcampuzano2• 3 years ago

Not financial sector, but in my own experience working in tech consulting partnering with large management consulting firms in the past, security was the last thing to get checked and the first thing to be neglected.

Sure there were some "bare minimum" things that was expected to be upheld like passwords not being in plain text, but come time for a security audit it was exactly as you say. Not done out of genuine interest in security but as a rubber stamp of items to be able to show the client "look we did this"

Not even joking when I say that the development plan for most of these projects basically just tacked on a few days in the last week for "security improvements" alongside things like "tech debt" rather than it being a top of mind thing for the entire development process.

oblio2• 3 years ago

From business perspective the auditors are clueless.

Hey! I used to be a young IT grad helping with financial audits.

If it helps, I was young and clueless and frequently I still figured out more about the business processes I was auditing than the client employees taking care of them every day :-p

ocimbote• 3 years ago

From my experience, you're the exception, not the norm.

Many audits and compliance frameworks have so many loopholes and DIY rulings that basically anything is possible and acceptable as long as whatever you're doing is written beforehand.

nimbix• 3 years ago

I worked at a company that had to deal with EY as a part of a tech certification. Tha auditors barely knew why they were being sent over. Out managers and techs had to explain the process to them and assure them the numbers in the report were correct. The auditors happily accepted that, and then charged around 100k. Top job.

rvba2• 3 years ago

That is a standard audit of any BIG4 company.

hestefisk3• 3 years ago

Will be interesting to see if Everest moves ahead after this.

Havoc• 3 years ago

Headline seems a little overdramatic.

listed
new
in Germany
two years

...that's gonna be like one or two clients max. Very bad PR but complete non-issue from a biz pov

_the_inflator• 3 years ago

Honorable mention here for Arthur Andersen and their role in the Enron audit: https://en.wikipedia.org/wiki/Arthur_Andersen

crazygringo• 3 years ago

Auditors insist that their services cannot be treated as a guarantee that accounts are truthful, and note that sophisticated frauds are by their nature difficult to spot.

As someone who knows nothing about this area, I don't understand why audits won't always detect fraud.

I would naively assume that auditors have access to all financial accounts and records of cash flows and they make sure they all add up and are categorized correctly. And that if fraud is happening, there will necessarily be numbers that don't add up.

So what am I missing? Do they not have access to all accounts and statements? Is it just a top-level glance at the numbers because there isn't enough time/money to scrutinize everything? Or can the numbers all add up but there's still fraud?

Is there anyone here who can give an example of something fraudulent that is hard to catch?

ejb999• 3 years ago

>Is there anyone here who can give an example of something fraudulent that is hard to catch?

Someone in control of the checkbook at a medical facility who starts a shell company with some innocuous sounding name (i.e. Smith's Medical Supply) and and regularly submits bills in low enough amounts that they don't raise concerns - which of course is relative to the size of the company - but say you run a practice that has $50M in annual revenues, it would be quite easy to send in bills for supplies that only amount to 1-2K per invoice over a long period of time.

This kind of thing happens a lot, and without actually contacting every single vendor, verifying they are real, and verifying every thing that was purchased, can be very difficult to root out - especially with supplies that get used up, as opposed to hard assets they are supposed to be around for a while.

When the numbers are small enough, nobody even bothers to verify them - even though over years they can add up to a significant amount of losses.

I hear about stories like this all the time - it is pretty common.

jsmith992• 3 years ago

That would hopefully be caught by internal controls and internal audit but would be of relatively little interest to an external auditor like EY. The figures are small enough to be immaterial, meaning they don't significantly affect the accounts. The external auditors would be more likely to scrutinise big contracts and related party transactions involving senior management.

calderarrow3• 3 years ago

Auditors have access to all the financials, but they only audit a statistically significant sample, because it would be incredibly expensive to audit every transaction.

Fraud can be easily detected if one employee is committing it. Fraud is substantially harder to find if two employees are involved, specifically 2 employees involved in internal controls.

For instance, if you have a policy that all checks paid over $10k require 2 signatures from corporate officers, it’s easy to catch a check with one officer forging the name of a second in order to siphon money to his 3rd party shell company.

But if both officers make a shell company, they can post the check as usual, and the check would pass auditor checks unless they looked into the specific corporation being paid, which may be out of scope if it’s a relatively small transaction.

Ultimately, you don’t need assurance that the financials don’t have fraud, you want assurance that they’re materially correct. Whether the company lost 10k to fraud or waste or incompetence is almost irrelevant for the investor, because the company has 10k less money. Obviously they’d prefer it not be due to fraud, but the impact on the financials is more or less the same.

Source: am a CPA

lumost• 3 years ago

Curious, this seems like a good place to deploy AI tooling. If I’m involved in internal controls, I’ll know what the auditors look for.

If an AI can augment the auditors to find more suspicious transactions such as to companies with no employees, or conflicts of interest - I could probably find more fraud.

hef198988• 3 years ago

As a subject of some of those audots, and as being responsible for a subset of relevant processes, I can confirm. I'd just add that, at least under SOX audits, also the internal controls are audited. And if those controls are laclong, that is a, potentially major, audit finding as well.

pwpw2• 3 years ago

Source: am a CPA

Your comment was the first in this comment section where everything was coherent and on point. While everyone else is spitballing, you hit the nail on the head. I was not surprised at all that you revealed you’re a CPA because the accuracy of your comment perfectly conveys your credentials. Funny how things like that can come through.

Source: am also a CPA

niklasrde• 3 years ago

Plenty of things aren't necessarily evidences. Just because you have access to account statements telling you you got a bunch of money coming in from person X for provision of service Y and a matching contract doesn't mean that the contract has been fulfilled or that the service was worth the money.

Same with picking a supplier - there are processes in place that try to assess quality, speed, price, effort, etc, but in the end it's humans making decisions, humans with bias and the ability to lie and make untrue statements as to how they made their decision.

Then there are the usual money laundering techniques, eg art dealing. You could easily spend a few million $$ on art for, say, a big office. And the VP's niece might be an artist that can demand that on the open market.

hahla• 3 years ago

It’s hard to grasp how complex accounting can be for companies. EY is not auditing small businesses, these are large multinational companies and per audit guidelines they likely just audit random samples of accounts. It’s not as simple as let’s pull a listing of all bank accounts and make sure everything ties. The actual effectiveness of audits is a different conversation.

mostlystatic• 3 years ago

Don't know much either, but I found this Money Stuff story interesting: https://www.bloomberg.com/opinion/articles/2023-01-04/privat...

Someone was CFO at two companies and the auditors only checked the year end balance against his falsified statements. So he transferred money from the other company temporarily to make them match.

"""To avoid detection, Morgenthau doctored African Gold’s monthly bank statements by, for example, deleting his unauthorized transactions and overstating the available account balance in any given month by as much as $1.19 million. [...]

Morgenthau knew that African Gold’s auditor would confirm directly with the bank the actual account balance as of December 31, 2021, as a part of its year-end audit. [...]

Morgenthau deposited more than half a million dollars of Strategic Metals’ funds into African Gold’s bank account on December 31, 2021, because he knew that African Gold’s auditor would confirm the account balance as of that date, in connection with African Gold’s year-end audit. """

https://www.sec.gov/litigation/complaints/2023/comp-pr2023-1...

badpun• 3 years ago

Interesting. I guess that is the inherent flaw of all audit methods which predominantly check the paperwork, while rarely venturing out into the real world. With sufficiently bad actors, the whole paperwork can be doctored and completely untethered from reality. Such bad actors need to only make a plausible Potemkin village for the controllers in selected spots where they are expected to verify if reality matches presented paperwork.

belter2• 3 years ago

Enron was doing similar trick by selling buildings to another business entity, and buying them back after the audit. I might not have all the details correct but it was the same type of shenanigans. :-)

electroly2• 3 years ago

Or can the numbers all add up but there's still fraud?

Yes, of course. Consider that you've set up a separate company and you intend to steal money from your employer. You've got a buddy in accounts payable that you're in cahoots with. You get set up as a vendor, you send invoices to the company, they pay them, and you never deliver anything. The company's numbers add up. They pay vendors for services all the time. Whether the vendors are real, the contracts are legitimate, and the expected services were provided isn't on the account statements.

someweirdperson• 3 years ago

Wirecard was the other way around. Send invoices to companies that don't exist, and transfer the earnings to a bank account that does not exist either. Don't forget to pay taxes of couse. Get bonus payments and earn nicely on rising stock prices.

AndrewKemendo• 3 years ago

you never deliver anything

A thorough audit would reveal this as well though, as it would actually evaluate the entire supply chain is actually working as intended.

noisy_boy• 3 years ago

Just because you have access to the entire source code of Linux kernel, doesn't mean you'll be able to find all the bugs in it. Sometimes the numbers may add-up but it is the patterns which may be suspicious. Automation like sanity checks/pattern matching etc (+ ML now a days) would help a great deal but even then it is not a guarantee.

puppymaster• 3 years ago

Bad analogy. Auditors have conflict of interests and risk losing clients if they keep asking too many 'wrong' questions. Reputable ones will refuse to sign the final audit. Less reputable ones will even help clients cook the book.

It's more akin to you being denied Linux maintainer privilege if you keep finding bugs and annoy Linus in the forum. Which is hardly the case (heh).

FabHK2• 3 years ago

So, Wirecard claimed to make huge profits. Now, the auditors would expect to see a pile of cash in the accounts. However, Wirecard claimed to expand rapidly by purchasing other companies in Asia. Those, then, booked most of the "profits" and were the assets on the book. Wirecard produced bank statements from the Philippines claiming that they had $2bn cash sitting there. So, to the auditor, the numbers added up, and the whole story was somewhat coherent. It's just that the foreign businesses and that cash didn't actually exist.

stefan_• 3 years ago

Which, to be clear, is a failure of the auditor. We don't need auditors to make sure the numbers add up; the whole point of double-entry bookkeeping is "the numbers always add up".

ozim• 3 years ago

There are different types of audit.

I expect that EY does not have access to numbers and any account information. You give away as least information as you can because you cannot just trust auditing team from some 3rd party not to use that data in collusion with your competitors.

What I expect they do have access to is documentation for procedures and processes. They audit for example if all procedures are written down and check proofs for procedures that were done by employees.

So it is like you have to clean the toilet and you have procedure that whoever cleans the toilet signs list. Every end of the shift manager checks the list and checks toilet if it is clean.

Fun part is having signed list for a day does not tell you that for half of the shift employee was only signing the list but did not do any cleaning and you might have dozens of customers seeing how terrible dirty toilet was.

appleiigs3• 3 years ago

Every end of the shift manager checks the list and checks toilet if it is clean

I think it's even worse: the shift manager checks list to see if the toilet is clean, but they don't actually look at the toilet.

hef198988• 3 years ago

Quite the opposite, EY as an aidotor has, and is supposed to het, access to any financially relevant data, documents and transactions they need to their job. That includes, among other things, invoices to customers, suppliers, inventory data and transactions, bank statements, credit card data, contracts with clients and suppliers and so on and so forth. That is actually part of a financial auditors job and responsibility. Yryong to minimize data access is exactly what Wirecard did, and EY accepted for some reason. Which absolutely not normal, it is in fact a major red flag.

Aeolun3• 3 years ago

Is it just a top-level glance at the numbers because there isn't enough time/money to scrutinize everything?

This seems to be the case for our EY IT audits anyway. Just send them the right screenshots and all the boxes will be ticked.

ryzvonusef2• 3 years ago

   > As someone who knows nothing about this area, I don't understand why audits won't always detect fraud.

as some one who studied accounting and auditing, here is a page from my text:

https://kfknowledgebank.kaplan.co.uk/audit-and-assurance/aud...

but the tl;dr is that auditors don't provide "insurance", they provide "assurance", specifically reasonable assurance.... that the accounts are "true and fair"

or to be put it in even simpler terms, they can't guarantee something fishy did or didn't happen, the transaction scope is just too much, they will "try their best" and do enough of a check to say if anything fishy pops put.

    > Is it just a top-level glance at the numbers because there isn't enough time/money to scrutinize everything?

yes you hit the nail right on the head. Of course things have changed, govt have put their own requirements in addition to auditing standards, but still that's an adequate summary.

the more through of a check, the more difficult, time consuming and expensive it becomes, and at some point the fraud becomes cheaper than the audit.

but even more importantly is the mentality. There is a phrase we were taught "Auditor is a watchdog and not a bloodhound" that kind of explains what auditors are supposed to do.

----

i left the field but i'll try to answer to the best of my ability

itissid• 3 years ago

What Engineering tech/AI tech do you think could make the process more thorough but not proportionally expensive?

johnwalkr• 3 years ago

"Exposure: Inside the Olympus scandal: How I Went from CEO to Whistleblower" is a great book that is in part about fraud by mergers and acquisitions.

appleiigs3• 3 years ago

Most of the others replying here are generally saying fraud is missed because it's complicated; however, in my opinion, it's because the auditors don't know anything else other than "do the numbers add up". Once the numbers do add up, they stop there.

The vast majority of auditors are only 3 year or less years out of school. They don't even know how a corporation is run at that point, so how are they supposed to catch anything suspicious.

sega_sai• 3 years ago

And then there is also this https://www.ft.com/content/5e6f15ce-9eda-4b04-883d-686617020... -- cheating on ethics exams by EY. It's all very funny that the whole system is built on assumption where the supposedly knowledgeable, ethical experts audit companies, but in reality, it nowhere close to that.

catchnear4321• 3 years ago

if only this were limited to ethics and compliance.

expertise is a virtue in modern society. signaling it well is often easier and more successful than developing and maintaining it.

damn lucrative, too.

this is why we can’t have nice things.

pts_• 3 years ago

It starts with interviews which select you based on how well you speak instead of what you speak.

version_five2• 3 years ago

"Cheating on ethics exam" sounds bad but it amounts to not taking some boring corporate CYA compliance training seriously, it's not actually unethical in my opinion. If anything it speaks to how bad corporate training is generally, not the ethics of the people "cheating".

appleiigs3• 3 years ago

Probably similar to you, I couldn't read the FT article because it's behind a paywall; however, I'm familiar with the general story. It's not some corporate training. They, plus many other accounting firms, cheated on professional licensing exams. Egregious because the accounting firms are doing the opposite of their sole purpose - add trust to the financial system.

koops• 3 years ago

They cheated on the ethics exam, THEN they lied about their cheating.

EarthIsHome• 3 years ago

This is still fallout from the wirecard debacle.

Giorgi• 3 years ago

No worries, ChatGPT will eleminate ALL audit business in year or two anyways.

TheRealPomax• 3 years ago

"The accounting-and-consulting giant is being sued for $2.7bn by the administrators of NMC, a London-listed hospital operator it had audited and which went into administration after understating debts by $4bn." would be cool if the article could say why. I hear that's something good journalists do.

mkl95• 3 years ago

I wonder how many bn the EU economy would save every year if Big Four companies were banned everywhere.

sealeck• 3 years ago

That's part of the issue. Another big part is that we should put a whole load more money into investigating financial crime (so funding white collar crime investigatory units as well as tax authorities).

Aeolun3• 3 years ago

TBH, I don’t understand why anyone would be naive enough to hire EY and then actually trust them.

smugma• 3 years ago

As a publicly traded company, you have to hire auditors. If you don’t like EY you can go to PwC, KPMG or Deloitte, but what’s the difference?

allendoerfer• 3 years ago

The others might be bad, but they are not Enron (EY Germany = former Arthur Andersen Germany) and Wirecard bad.

Aperocky2• 3 years ago

the incentives are misaligned.

Publicly traded company should pay a small fee to SEC each year and they be responsible to hire auditors, for everyone. Or even better, market bid for auditors with incentives for finding irregularities.

With the current line up of incentives, auditors merely ensures any fraud are slightly better hidden.

Aeolun3• 3 years ago

I’m not saying you shouldn’t hire them (though any local auditor with the same license would likely be better from a quality standpoint), I’m just saying you shouldn’t trust anything they report.

qwytw4• 3 years ago

Well I bet wirecard did trust them to help them to commit fraud.

wouldbecouldbe2• 3 years ago

EY, Mckinsey, Accenture, BCG all of them should be banned.

They were the big proponent of the the just in time management principles in the hospitals in the Netherlands.

Then when covid came they were the first the market on twitter & linkedin for advice how to improve your health inventory & deal with covid challenges.

Serious impact with zero skin in the game. These consultants are parasites.

They are mainly used as proxies to make decisions managers dont want to be responsible for.

Cantinflas• 3 years ago

Agree about the proxy part for the consultancy business, it should be common knowledge and those manager should be fired

version_five2• 3 years ago

This article is about auditing, your comments appear to be about consulting / advisory businesses.

Otherwise, I mostly agree, though I don't support a ban. It's a complex topic - companies are free to waste money how they want, and even governments do need real advice. It's just too bad they pick such shitty advisors to support decisions they've already made instead of actually seeking good advice.

oxfordmale• 3 years ago

Yes, companies should be free to waste their money as they want. However, auditors serve a purpose and that is to identify any fraudulent activities. In the case of Wirecard, EY failed at this.

vajrabum• 3 years ago

Advice for money at least at the top level is in the long run always going to end up bad advice. The incentives are pretty much all about lining up more work for the firm.

_fat_santa• 3 years ago

They are "professional scapegoats" IMO, companies pay them to take the blame and their business model seems to be: collect fees, do an "audit", pay the fine, keep the spread.

zzzzsleep6622• 3 years ago

Audit results are taken very seriously by companies operating in heavily regulated industries that intend to stay in business, so healthcare, finance, insurance etc.

If you are a team lead doing programming for one of these sorts of companies and the auditors come round with some findings, I promise you that you need to take it deadly seriously. I've seen engineers fired for cause by the board of directors of a fortune 500 for failing to do so. Word gets around and nobody will touch them after that. Its literally career ending to poo poo audits.

Tech companies are the odd man out when it comes to audits, which is why its possible for so many in a thread like this to have opinions that are so wildly inconsistent with reality. Who knows how much longer that will last, particularly with advances in AI.

looping__lui7• 3 years ago

No. This is nonsense.

You audit accounts that are falsified and give thumbs up: you close shop, are held liable for damages and could go to prison.

Auditing companies are crucially important for a working economy. Bank loans, bonds, equity markets would all be chaos and fraud mayhem without them.

hef198988• 3 years ago

Well, EY didn't get banned from consulting, but rather accounting work. And the latter is crucial, and even legally required for all and every public company. The reasons are, among others, Enron and , yes, Wirecard. And the fact that EY screwed up Wirecard is the reason they got banned.

By the way, it was KPMG that caught the Wirecard fraud. And KPMG is in the same league and business as EY.

One of the reasons, IMHO, that Wirecard managed to get away with it for so long is, that as a German company, they didn't have to switch Accountants and have another accounting firm helping them in preparing the books. That would be a SOX set-up, and it makes perfect sense. It helps to prevent fraud and it protects retail investors, both of which are good things in my book.

Strategy consulting, the stuff BCG and McK does, is different. As is the outsourcing and consulting Accebture does, which is also different from what McK does. The topic so, is EY and accounting.

looping__lui7• 3 years ago

McKinsey and BCG do not audit companies. They are consultancies and do not certify accounts to be “correct and legit”. Think of auditing companies a little bit like of vehicle inspection shops certifying your car is safe for the road.

Consultancies are not doing that.

I’m not sure why certain businesses should be “banned” because YOU believe they do not add value. Do you pay them? No.

It’s not correct that they are proxies for decision making that mangers don’t want to be responsible for. Neither McK nor BCG could run at the scale they do for five decades if that was the case.

But I suppose that was just your happy Sunday rant of the day to let off some steam.

331c8c712• 3 years ago

I’m not sure why certain businesses should be “banned” because YOU believe they do not add value. Do you pay them? No.

Yes, whenever they are hired by the public sector. http://recreation.gov is one example in the US I know about.

amrb• 3 years ago

The big four prop up the business world, status quo.

Say your a large company listed on the stock market, so pick from the four big companies because serious companies use them, who's the CFO an ex-account from the big four who knows their orderand process.

Now if no other companies can enter that bubble, are we really surprised at the outcome!?

euix• 3 years ago

My partner works at one of these big four companies and the way she puts it - they essentially function as outsourced expertise for governments the world over - essentially expert functions have been hollowed out of state governments and into the private sector and thus there is really no expertise within the national government level to handle complex tax and accounting situations and they are instead all outsourced to these firms.

We should really consider the present western world as some sort of marriage of corporatism and government - they are really hand in hand as two sides of the same coin.

55555• 3 years ago

Yeah but then the experts at the big 4 are 23 year old grads with no experience. I don't get it.

jkukul• 3 years ago

there is really no expertise within the national government level handle complex tax and accounting situations and they are instead all outsourced to these firms.

worth mentioning that the complex tax situations are the effect of lobbying of the big four firms in the first place.

dragonwriter• 3 years ago

We should really consider the present western world as some sort of marriage of corporatism and government

“Corporatism” is a model of society in which government, private industry, union, and other power centers are integrated, mutually cooperating, and centrally coordinated. A “marriage of corporatism and government” is just “corporatism”.

(Corporatism is an element of, but not coextensive with, fascism.)

epups3• 3 years ago

What is "skin in the game" in this context?

ksec• 3 years ago

They are mainly used as proxies to make decisions managers dont want to be responsible for.

Interesting I just watched a video [1] on consulting yday. It is on something similar happening in the UK. And another video ( couldn't find it ) that suggest unless there are some other interest for these consultant, ( like outsourcing certain function to certain clients ) all they do is to make a case for what the management wanted to do anyway, and rubber stamp on it. And mostly because management wanted something on their CV / resume, so they could move on to another job and repeat the same process again.

[1] https://www.youtube.com/watch?v=Aj2od-Jpanw

cjalmeida• 3 years ago

Er… McKinsey and BCG don’t even do audit. What do they have to do with TFA?

odiroot• 3 years ago

Now do McKinsey. Probably would work out even better.

0xDEF• 3 years ago

When GDPR was introduced I was hoping it was technical people who would audit software for GDPR compliance.

Instead it is lawyers and accountants working for these big auditing companies.

GDPR is good but the absolute insanity of how GDPR is being applied cannot be understated.

SilverBirch• 3 years ago

I don't know if I have just enough knowledge to be dangerous, but it seems to me that auditors don't really do what people think they do. Auditors seem mainly to just double check the numbers they're handed. This serves a purpose, it provides some level of guarantee that companies that are acting in good faith are generally reporting correct numbers. Auditors don't do what people seem to think they should do - investigate and uncover fraud. If a company wants to commit fraud, the auditors simply aren't resourced in a way that would allow them to uncover it because there's not really that much incentive to uncover the fraud, the fraudster is extremely motivated, and if you wanted that level of hostile investigative work it would be much more expensive for every company.

Also, from a dynamics perspective, this is a lot like the insurance industry. In the insurance industry you can underestimate risk during the good times, take profits, and then go bankrupt in the bad times. In auditing you can spend a lot of money being extremely thorough - you'll lose all your customers because you're expensive and painful. So instead you lower your standards, you're cheap, you're easy to work with, and it's easy for a fraudster to slip through, in the 1 in a 1000 chance that happens the regulator comes down on you like a tonne of bricks. Well ok, but was EY less competent than McKinsey or did they just get unlucky that they're the poor bastards who stepped on the landmine?

Well, maybe in this case we should learn from the insurance industry and institute some sort of fund that all auditors pay into that pays out in the case that fraud is discovered.

krn• 3 years ago

Well ok, but was EY less competent than McKinsey or did they just get unlucky that they're the poor bastards who stepped on the landmine?

I have asked myself the same question, before I noticed that EY is basically the Credit Suisse and the SoftBank of the audit world[1]:

EY has been involved in many accounting scandals: Bank of Credit and Commerce International (1991), Informix Corporation (1996), Sybase (1997), Cendant (1998), One.Tel (2001), AOL (2002), HealthSouth Corporation (2003), Chiquita Brands International (2004), Lehman Brothers (2010), Sino-Forest Corporation (2011), Olympus Corporation (2011), Stagecoach Group (2017), Wirecard (2020), Luckin Coffee (2020) and NMC Health (2020).

In fact, Wirecard managed to partner with EY, Credit Suisse, and SoftBank simultaneously just before going bankrupt.

Maybe because no reputable companies wanted to touch it?

[1] https://en.wikipedia.org/wiki/Ernst_%26_Young#Accounting_sca...

hef198988• 3 years ago

Well, EY started as part of Andressen (?) and was as such part of the Enron scandal. We shouldn't ignore the scandal of the century. EY so is a very reputable accounting firm. Unreputable would be the Metaverse headquartered shop FTX used.

jasmer4• 3 years ago

E&Y and McKinsey are not remotely in the same business.

E&T are accountants who double check that your financials are what they say they are.

McKinsey are management consultants who generally do strategic projects, and/or facilitate other consultants to actually do work.

hef198988• 3 years ago

The auditing arm of EY is in a completely different industry than McK and similar firms.

That EY's auditing track record is, well, checkered is a different problem. By throwing those two into the same bucket, so, shows some lack of understanding of auditing, accounting and consulting. EY also does, sometimes legally required "consulting" work for in the accounting space. That work is completely different from stragoc management consulting ala McK and BCG. And it also a different beast than the lower level outsourcing consulting ala Accenture.

andrewjl• 3 years ago

The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud.1 Because of the nature of audit evidence and the characteristics of fraud, the auditor is able to obtain reasonable, but not absolute, assurance that material misstatements are detected.2

https://pcaobus.org/oversight/standards/auditing-standards/d...

lordnacho2• 3 years ago

What never made any sense to me was the incentives. Is the company supposed to hire people to write a public report saying the company committed fraud? It doesn't really seem like it makes sense for anyone. If anything, you'd just do some minimal performative work to say you had a good look in the company, and then you pick up more work next year. If you write a critical report, how many companies will want to hire you? I'll pick the easy going auditor who doesn't give me a hard time, thanks.

Contrast that with say an HMRC tax audit. They're not there to be your friend and it actually makes sense for them to investigate certain firms.

It would be interesting to read a history of the industry to see how we ended up here.

jsmith992• 3 years ago

The auditors are appointed by the audit committee which consists of board members who are non executive directors i.e. they are not involved in the day to day running of the company and so theoretically should be independent and interested in uncovering any wrongdoing by management.

remus• 3 years ago

Auditors seem mainly to just double check the numbers they're handed. This serves a purpose, it provides some level of guarantee that companies that are acting in good faith are generally reporting correct numbers. Auditors don't do what people seem to think they should do - investigate and uncover fraud. If a company wants to commit fraud, the auditors simply aren't resourced in a way that would allow them to uncover it because there's not really that much incentive to uncover the fraud, the fraudster is extremely motivated, and if you wanted that level of hostile investigative work it would be much more expensive for every company.

While I agree audit is a hard job auditors should not just rubber stamp what the company gives them. They should ask probing questions like "where did this sale come from?", "how did you calculate this figure?" and "why are you doing this? It is unusual." A consequence of this is that they may pick up on suspicious signs within a set of accounts and choose not to sign them off, but I wouldn't say theeir job is to identify fraud per se.

What is clear from cases such as wirecard is that EY have failed to ask these probing questions on several occasions, and subsequent audits (by other firms) have shown it is entirely possible to ask appropriate questions and uncover dodgy practices.

IG_Semmelweiss• 3 years ago

1) auditors do uncover errors. sometimes those errors leaad to firings and restatements. An entire company does not need to be complicit with fraud, for there to be fraud. key employees commit fraud to enrich themselves or make their numbers look better. from that perspective, the board does benefit from existing audits.

Also audit is highly regulated. If the standards are too loose the PCAOB can come in and punish you severely.

Its the pervasive cases, the wirecards, that are hard. Those are the frauds that are pervasive and go to the top, and include auditors that are not pushing back. These are the true landmines.

How are they addressed? Many ways: A) There is a layer of prevention, where audit firms will force rotation of their lead audit partners on an audit every 2-3 years to prevent cozy relationships.

B) And theres Also the "audit the auditor" where another partner has the sole job of reviewing the work done. He's the landmine hound looking for explosives.

2) the insurance business actually rakes in profits typically after a large disaster, when premiums are sky high and customers are are hyper aware of the risks (and Boards unforgiving with CEOs that fail to mitigate the risks.

23B113• 3 years ago

I worked at Accenture as an MD for several years, primarily on innovation and transformation programs. I have plenty to say about them, but I think the key driving factor for all of the grift and awful performance has a lot to do with how they operate, which is to sell in a big program, then pull a switcheroo and try and pack a project with as many low-paid MBAs as possible – kids straight out of college tasked with a (thin slice) of a major strategic program, or find some sub to farm it out to at a really low price.

Since going out on my own as a consultant – focused on the same sort of growth programs, as opposed to audit – I generally find that I can achieve the same outcomes for a client with a handful of people on a a reasonable budget.

I left primarily because it's just bonkers how much pork these big consultancies manage to get away with packing on, to the point where it was a major reputation risk to me.

I'd encourage any CXOs out there seeking to outsource major strategic initiatives to consider hiring individuals or smaller entrepreneurs with experience inside the bigs, but without the downward pressure to get as many butts in seats as possible.

chinabot• 3 years ago

Lets face it, the answer from chatGPT would be almost identical to what these consultants say, however the main reason for consultants is to CYA so if the decision is bad, you can blame someone else.

number6• 3 years ago

ChatGPT is not that old. So someone had to do the writing

sizzle• 3 years ago

Their consultants are probably utilizing ChatGPT now to 10x their buzzword bingo outputs

23B113• 3 years ago

I won't deny that I've been using it as a research assistant to investigate a lot market forces and conditions, but as always I have to support it with quality data and citations if it's gonna play in the board room and with savvy institutional investors.

denlekke• 3 years ago

just repackage chatGPT as a new consultancy, McKenzie, and hope no one notices

actually, brb

unixhero• 3 years ago

Ex accenture here, left and started my own. M u c h better and my clients love that I am not from a big shop. Money is good and life is smiling.

23B113• 3 years ago

Congrats man feel free to reach out if you ever want to collaborate. 05-trivet.turner@icloud.com

I'm pure strategy, most of my clients are 'intraprenurial' CIOs, CSOs, CFOs.

benatkin2• 3 years ago

Part of the grift is that roughly one of ten of these unproven low-paid MBAs will be exceptional. So when one does a good job they'll use it as an example of typical performance. I see this happen with dev talent agencies and unproven software engineers. Only the great projects go in their portfolio and the satisfied clients are happy to appear on their website because they don't realize they just got lucky.

With software engineers some of the remaining 90% really are talented but spend most of the project learning on the job, fixing an issue in a few hours that a senior engineer in their stack could fix in 30 minutes with their arcane knowledge. Meanwhile the senior engineer goes to the scrums (they love to hide behind agile). It's a solid grift.

23B113• 3 years ago

Yeah I mean I don't blame people for celebrating their successes and sexiest projects – I certainly don't include all my fails in my portfolio, heh.

What's interesting about this article (and the general state of management consulting) is that the cracks are beginning to show in these big firms that used to have a "nobody got fired for hiring EY" reputation.

andrewmutz• 3 years ago

Does outsourcing major strategic initiatives even work? Seems like the definition of the sort of things you shouldn't outsource

benatkin2• 3 years ago

I think the answer is "it depends".

23B113• 3 years ago

Well for my clients they're often up against maxed-out resources or employees who are just mired in their day-to-day and need a sort of entrepreneur-in-residence. For me, I'm given one or several major strategic initiatives and then my job is to build a 'demonstrator' that hits all of those without needing to fully build them out.

My client (typically an executive) can then take the presentation to his or her leadership team or board to unlock the funding required to stand up the 'execution' phase of that initiative internally through hiring.

So I guess you could say I build MVPs or proofs-of-concept that, if they work and are desirable to the company, get spun out into new lines of business.

throwayyy479087• 3 years ago

No, not if you're doing it to save money. If you're doing it because someone else is better, then yes.

See: IBM's software engineering, vs Delta's offering of their maintenance ops to other airlines. One has really, really worked out, the other hasn't.

Jolter3• 3 years ago

Interesting, but how does your experience relate to the linked story? Is EY somehow related to Accenture? Are Accenture also doing auditing?

23B113• 3 years ago

They're both global professional advisories with a ton of similar services and competing for similar clients. They ought to be thought of as basically body shops for management consulting.

hestefisk3• 3 years ago

Accenture was spun out of Andersen Consulting after the Enron saga. Andersen had both a consulting business and an audit arm - they were one of the “big five” audit firms before the collapse of Enron. Today, Accenture only do consulting; they do zero auditing. EY are not related to Accenture or Andersen. EY is an audit firm (one of the “big four”) with a massive consulting arm. Unlike Accenture which is a global firm, EY operates more like a local franchise. They do this to minimise risk of contagion from a bad apple like in Germany to other audit businesses in different countries. As such, EY is far from a global firm, but more like a collection of separate audit and consulting firms in different countries who all have a license to use the EY brand. This is an important difference.

ethbr02• 3 years ago

On the consulting side of the audit firms that you're talking about, I think people misunderstand why companies hire big consultancies.

It is not for performance.

It's for minimizing risk.

And not "risk that the project will fail to hit its schedule." Rather "risk that the company is unable to deliver the thing we're asking for at all."

When I've seen big consultancies fail, it almost always goes like this: (1) big idea sold with A-team, (2) contract won and lowest-cost B-team substituted in, (3) B-team screws up execution, and customer usually figures out on or right before target delivery date, (4) if smart, customer tears consultancy a new asshole, from people with VP et al. titles, (5) if interested in further business then consultancy profusely apologies and puts an A-team back on the project, (6) A-team delivers, albeit after schedule.

The difference between ey et al. vs smaller shops is (4). Smaller shops don't have extra senior bodies laying around to retask.

So a more accurate description of a VP hiring ey is probably "I know they're going to screw it up, but I know if I bitch enough they'll eventually get it done right."

23B113• 3 years ago

Nailed it. My only beef is that when you’re going line-by-line on the deliverables, arguing over the “definition of done” that you’re actually crushing whatever good will and budget remains for the innovation a company actually needs.

And when I say innovation I don’t mean gravity boots, I just mean a progressive use of robust tech, easily understood processes, and a general aversion to complexity - so you don’t have to do it all over again in five years.

OTOH executive retention is tanking, so maybe it’s fine you one-and-done it, and move on to your next job before the truth is out - YOLO! (Barf).

grumple• 3 years ago

The risk of non-delivery exists for these large firms too - see Hertz vs Accenture, for example. Or Indiana vs IBM.

In my company, to hire a company like IBM or Accenture we have to propose a plan, which has to be approved by many layers of bureaucracy. This plan includes a budget. A real risk is that the consultant underdelivers, or we need more budget. Then we have the sunk cost problem, and we have a bureaucratic one as well to increase the budget. And the consultant already costs more than hiring on our own and doing it in house.

eru• 3 years ago

And not "risk that the project will fail to hit its schedule." Rather "risk that the company is unable to deliver the thing we're asking for at all."

The other big risk is: 'Will _I_ get in trouble, if the project fails?'

truetraveller2• 3 years ago

Actually I disagree strongly. It's primary because blame shifting. You know, "no on got fired for buying IBM". Also, to confirm a C-execs "vision". He can always say "<big firm> agrees with this too".

jojobas• 3 years ago

Big 4 is a multiway confidence trick at this point, scamming employees, clients and governments all at once.

tranchms3• 3 years ago

It’s true.

I work as a Client Partner for a $1B+ consulting firm that comes in and cleans up after these situations. We bring in seasoned, experienced consultants with the functional knowledge that these big consulting firms don’t have. And even though our consultants are more costly on a per head basis, we’re more cost effective overall, because we do more with less.

I always admired the big consulting firms until I realized how consistently they fail to deliver. It’s hard for the clients to fix it because they genuinely think they are getting the best. It’s sad and laughable. Eventually they figure it out. Usually when a firm like us comes in and exposes the dysfunction by getting a few consultants in there that know what they are doing and running things like it should. And it generally comes down to a lack of leadership— by both the client and the big consulting firm. They point the finger at each other. But also it’s just a lack of experience by those running/implementing the program. Staffed by consultants who read all the books and go to the trainings and classes but have never been in industry and been in the clients shoes.

Eisenstein• 3 years ago

I'm a bit confused because this isn't my industry. What exactly are these consultants doing? What are they supposed to 'deliver'?

jasmer4• 3 years ago

It's a form of corruption. In China, they take 10% of the top, in Africa the money dissapears, in the West, consultants take 80% and it's all legal.

23B113• 3 years ago

I've never heard of a U.S. based consultancy taking 80%. In my experience we'd be happy with an 18-20% margin, but more often it was half that.

expertentipp• 3 years ago

Still beter than one-off few million EUR fine... billion worth of fraud here, billion worth of fraud there, and pretty soon we'll be talking about real consequences.

pwpw2• 3 years ago

As a CPA and now software engineer, I'm observing quite a bit of confidently incorrect or misguided takes in here. For starters, people are comparing EY to McKinsey and other consultancy firms, but this article is discussing EY's auditing practice, which begs for comparison to the other members of the Big 4: PwC, Deloitte, and KPMG.

I do think the incentives are entirely wrong for auditing. Auditors should be paid for by shareholders. Even if it decreases your dividends, you _want_ to pay for an auditor to provide reasonable assurance that there is no funny business going on with your money. In fact, that's how auditing began. The current system provides for conflicts of interest where partners are incentivized to please the board of directors that hire them and pay them large sums of money.

However, this doesn't lead straight to all auditors covering up fraud, and I feel that many people in these comments are overly critical. Having skepticism of the process is great (and auditors emphasize professional skepticism themselves), but I don't think we should throw the baby out with the bathwater as the current system does still provide a lot value. I also think many people here believe auditors at Big 4 firms are forensic accountants, which they are not. In the US, the FBI employs the forensic auditors many here may be thinking of. The auditors that EY employs are there to provide an audit opinion that expresses reasonable assurance that the financial statements are fairly presented. It's a very tough job that cannot be performed perfectly in its current form yet works remarkably well, all things considered. Finally, EY is a very large company that's really made up of many individual pieces that share a larger name but are structurally different, particularly between regions such as the US and Europe. EY in Germany certainly deserves the negativity they're receiving here, but that shouldn't necessarily be applied to all employees of EY all over the world. It's an accounting firm made up of thousands partners who are CPAs (in the US at least).

The exciting thing is that given the nature of accountancy, the industry is extremely conservative and open to disruption. However, that disruption has to adhere to numerous rules and regulations that would probably frustrate many entrepreneurs here. Most auditors are working with Excel and PDFs and do mindless work at the lower levels. A lot of this is getting off-shored, which is lessening the quality of the work. If a new technology was able to be designed that could overcome the shortcomings of humans manually using Excel and PDF markup tools while providing a higher quality of work than the off-shore work many in the industry are using, there would be a great opportunity to replace jobs at the lower level - boy I don't like saying that out loud. Hopefully it would allow for new employees to focus more on judgement based decisions using their expertise gained from obtaining the difficult to attain CPA license. They say that every year at a Big 4 accounting firm is equal to two years in industry, and I certainly believe that. Based on my experience, I strongly believe that licensed CPAs that come from auditing firms know far more about the ins and outs of businesses than the MBAs at consulting firms like McKinsey that many here seem to be conflating them with.

Perhaps I should join an accounting software company. It can be easy to forgot how much expertise I have as a CPA when I was surrounded by them in my previous career. Yet I have found that the software companies I have reached out to undervalue my CPA and overemphasize leetcode skills, which is truly a shame. If anyone is interested in a decent software engineer with a CPA to add, I'm open to talking!

amai• 3 years ago

This is capitalism failing again because of an unchallenged oligopoly/monopoly. The obvious solution would be to break the oligopoly down. Instead we see mild punishments like this. This will not change anything.

EY gets banned from new audit business in Germany

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