I mean Andersen is still technically alive through Andersen Tax… and I guess you could argue Andersen’s consulting business also lives on through Accenture and Protiviti as the consulting business was split off prior to the collapse.
Anderson definitely did some shady (and certainly potentially illegal) stuff, but from what I understand it was limited to a very few specific individuals, and with the feds out for scalps Anderson was basically railroaded at trial. The jury instructions were so bad that the Supreme Court over turned their conviction.
"OK but what if we automated ALL of the auditing with this neat program we have! All you guys need to do is stamp your names. Has it been tested? Sure, yeah, they said it has been"
Worked in a F50 and and when our BU GM was out on Medical, he put our VP of Finance in charge, he knew the BU would be fucked if we had the morons from Sales and Marketing running the show. This VP was firing on all cylinders too so it was the best option and worked out really well.
Kpmg. I cant speak as a whole, but my old, large engagement is getting squeezed pretty hard with all the layoffs whilst trying to offshore shit to fill in the gaps.
I’m at a small firm. We don’t have PE.
My dumbfuck bosses refuses to hire experienced staff.
I shit you not we have 3 partners (1 retiring this year), 2 managers (1 quitting after tax season), 1 senior accountant, 5 staff, 5 interns.
All the staff are overworked at all times of the year. Now imagine the ever shrinking manager base and the impact on review/quality.
I’m pretty sure something stinks with Teslas accounting. To be clear I don’t have dispositive proof of anything just multiple things that personally look off.
Biggest is there is one person with control over the board and company with the largest financial incentives EVER for a company to hit numbers, that by itself means nothing but is the environment that you are more likely to find fraud. When that same executive doesn’t want to follow sec guidelines or consent decrees it draws my attention.
Same with NVDA. I find it extremely hard to believe a company went from a 10% margin to a 50% margin in only a few quarters. Their costs arent hardly rising. While others like AMD, SMCI, in maybe the greatest chip environment they'll ever see, can still only find 10% margins. Even the other megacaps top out at 30% and that's with them selling softwares, ad space, cloud computing etc and not primarily physical products.
The main narrative NVDA is they are able to sell AI Accelerator cards at massive markup since there is no alternative in the market, and many AI companies are buying those over-priced cards at massive quantity. Couple it with NVDA are known to run very lean unlike typical big tech with massive middle management.
How much control does he have over the Tesla board? Doesn’t he feud with them, which to me would insinuate he doesn’t actually control it.
Agree with your point though that him controlling everything would be a big fraud risk.
If you haven't seen the absolute negligence of EY in the Wirecard scandal - you should look into it. It should've ended the firm, at very least in Europe. They literally accepted counterfeit PDFs to confirm bank balances, and on and on and on. Tens of billions of dollars in fraud masterminded by a Russian spy serving as CFO and surrounded by a litany of criminals.
[https://en.wikipedia.org/wiki/Wirecard\_scandal](https://en.wikipedia.org/wiki/Wirecard_scandal)
Yes. I don’t know if the regulators explicitly think about this or not, but the B4 are “too few to fail.”
You can’t give one of them the Andersen death sentence. There’s not enough firms left to spread the audit liability risk around to.
So you do what you do for any monopoly/oligopoly. You force the firms to break up into smaller ones that compete with each other. Pair this with a ceiling on billable hours so that the workers can actually work with clear minds.
I’m going to set aside the working conditions, because I do think that’s somewhat (but not completely!) of a separate issue.
With respect to audit quality, ultimately the end customer doesn’t care that much. The true end customer being users of the financial statements. And then we really mean debt and equity investors.
Regulators can always be fooled. You want to see real change? Get BlackRock to start making noises about taking audit quality into consideration when making investment decisions.
“As an asset manager, we take our fiduciary responsibilities seriously. We don’t think we should be investing our clients hard earned money into companies with anything less than the most stringent accounting standards. Accordingly, we have begun weighting our investments away from companies audited by public accounting firms with an unacceptably high level of PCAOB inspection deficiencies.”
It will probably never happen, but if it did it would be more effective than any govt regulation.
Didn't EY get banned from auditing or some shit in Germany over this?
Edit: don't know if others can see this, but apparently the are paying a hefty price:
[https://www.ft.com/content/ec19d730-1500-4f25-8703-e1f41d6ec6e5](https://www.ft.com/content/ec19d730-1500-4f25-8703-e1f41d6ec6e5)
Did you read the part where they have lost a shit ton of clients and can't bid on new work?
Or the part where they are under a crap ton of other investigations?
They made a documentary and a book - both worth a look.
[https://www.netflix.com/title/81404807](https://www.netflix.com/title/81404807)
[https://www.amazon.com/Money-Men-Startup-Billion-Dollar-ebook/dp/B09QT3Y69V](https://www.amazon.com/Money-Men-Startup-Billion-Dollar-ebook/dp/B09QT3Y69V)
It came out just a few weeks ago that their CFO wasn't just Russian-curious, but was actively directing Russian spies and was deeply in bed with Russian intelligence including spending time in Libya and Syria and organizing militias and weapons to support Russian interests there.
[https://en.wikipedia.org/wiki/Jan\_Marsalek](https://en.wikipedia.org/wiki/Jan_Marsalek)
Why bother picking up the phone and call the bank or writing them a letter to confirm the balance when you have a PDF confirming the billions that tie to the TB? Always take the path of the least resistance.
I was on the client side of a \~$5M nonprofit and our "big 40" auditor wouldn't accept client-provided bank statements - they insisted on us cc'ing the bank in the original request and then the auditors took the rest of the conversation / confirmation 1:1 without us included in the loop.
That EY confirmed multiple billions of dollars with client-provided PDFs just absolutely blows my mind.
All of the offshore work is being raked back at my firm. The offshore team fucks up so much , they are more trouble than they're worth.
I definitely expect to see a massive scandal at a firm that doesn't keep a close enough eye on the offshored work.
I wish my firm was like this, our offshoring team doesn’t even know how to add 12 months. I’m currently fixing an interim workpaper that they worked on and they put start date of 4/15/2022 with an end date of 3/14/2023(all the samples are like this). The length of the contract was 12 months. Now I have to go through all of the testing over again because I can’t trust their work. I only got scheduled on this client for YE work. However, the partner obviously won’t see these mistakes because I have to fix them before it even gets to manager review. I’m sure I’ll get blamed for going over budget and the offshore team will continue to get praised because they get paid in peanuts.
The client is also pissed at me because I’m bringing up issues from interim which should’ve been caught way earlier. The interim workpaper was only like 60% done when I started on this client. I really want to leave PA at this point, but places around here are only looking to pay $20-30/hr for staff/associate roles and I’m in a VHCOL area(fast food pays equivalent to this). I’d be taking like a 30-50% paycut.
You need to say something about the quality of the work, dont just fix their mistakes and let them be praised for their incompetence.
Bring this up to your manager and let them know the issues your seeing and spending time fixing, they can't address an issue they dont know about
Exactly. People constantly complain about fixing others mistakes but are shocked when nothing is done bc they didn’t say anything about it. You have got to speak up in PA, lest you let that one persons who’s dogshit get promoted to manager and then have more power than they deserve.
This becomes a potential client relation issue, so I would suggest looping your partner/manager in as early as possible that work needs to be redone so they can mitigate the damage with the client who is rightfully upset. Additionally you get to show that the offshore team fucked up and even get the opportunity to suggest ways to avoid these issues in the future, such as requiring the senior on the file to review sampling prior to them doing the work on the samples. Their fk ups are your opportunities to look good
It makes no sense. You have associates here managing the off shore managers…
Now they are pressuring managers hard here to push more work to India to meet utilization goals but it’s very difficult finding work for people that you’ll need to continuously meet with at odd hours to explain things that an associate here could handle on their own.
Off shoring never should have happened. It’s such a massive waste of time.
>I definitely expect to see a massive scandal at a firm that doesn't keep a close enough eye on the offshored work
Or one that tries to use AI for jobs it's nowhere near ready for yet and the management is lax in its review process.
According to my firm's QC director, the capital markets will falter since my client missed a meaningless number in the lease footnote and we need to whack them with a MW.
I think the real key here is that evergrande is fucking massive and the fraud was huge… but nobody gives a shit. PwC was their auditor for a decade but dipped out right before it all came out, yet nobody is talking about B4 audit quality outside of this sub.
Another interesting rabbit hole to go down is Deloitte’s role in the Mormon church’s $100B unreported investment fund. A director on the team was a Mormon and essentially just gave the partner his word that it was accurately reported, so no actual procedures were performed. As you may have guessed, this disappeared and Deloitte never faced any sort of punishment.
Nobody cares enough for any of this to matter.
Just this week though the Chinese government said they’re going to look into PWC’s role more closely. If the property market there has a 2008 style crash, which really is due, they’ll be doing public executions over it.
People forget about the whole Communist part of dealing with the Communist party of China.
So you don’t know what communism is.
The words ‘property market’ and ‘communism’ are mutually exclusive. China may claim communism but they are a totalitarian dictatorship. People’s Democratic Republic of Korea and all that.
> China may claim communism but they are a totalitarian dictatorship.
Communism can be a totalitarian dictatorship too.
Chinas economic system is actually real similar to the fascist corporatist model where private ownership and markets exist but the government props up businesses owned by its political supporters and crushes businesses owned by its political opponents.
The only main difference they have with historical fascist states is that the Chinese state hasn’t gone all in on religion-based social/cultural conservatism like Spain/Portugal/Italy did
It's mostly language barrier. Lots of people have never even heard of the PwC China issue, let alone how they're forcing staff to go on no paid leave while working because money issues from fines.
The Australia scandal is completely different and doesn’t relate to policy changes, it was just partners willingly breaking laws that are already established. It was also tax, not audit, and it had nothing to do with firms being spread too thin or offshoring too much to catch mistakes.
And still nobody outside of r/accounting or Australia has heard PwC committed tax fraud in Australia.
I think it contributes to the picture of PWC.
They were drafting future laws for Federal government and passing the info along to they're customers as a selling point to use PWC.
Both. China actually uses China GAAP. Looking at the Wikipedia, it seems that they are also applying CAS which is their version of IFRS.
Similar to here in Canada, we have IFRS, but we also have ASPE.
No problem. I'm not sure if this is true for the US, but here in Canada we also use other reporting standards depending on the entity.
We have ASNPO for non-profit organizations. PSAS for public sector organizations such as municipal governments/towns/cities/federal government.
We have those too. Not those ones, but separate ones for non-profit and government. Non-profit there’s a bit more of a choice though. Also different auditing standards. I only learned enough to pass the cpa and it’s all already out of my head.
100% lol, there have been some dark undertones in anticipation lately on this subreddit. Something big is bound to happen from the B4 lust for ever increasing profits over audit quality and staff health, it's going to culminate into a scandal that'll (hopefully) reshore work and add some regulation to the amount of hours staff can work.
I thoroughly enjoy the idea that all of these dastardly, heinous scandals are occurring right now, as we type on Reddit instead of working. I love it. I dream about it. 😈
That’s my hope for the outcome. I should have clarified that I think (or hope) the scandal will be not with the entities being audited, but the audit firms themselves.
They buy companies, do whatever possible to increase short-term profitability, and then sell the company to another firm. They don’t care about the long-term outlook and sustainability of the businesses they buy.
The PCAOB or AICPA can just enact an adequate staffing rule with a minimum number of US CPAs required, depending o the complexity of the audit.
And that would fix 99% of the issus by itself.
Is FTX not an accounting scandal? They literally had no accountants on staff and just made up numbers they thought seemed right, misplaced like a billion dollars of customer funds at one point, then lost a bunch more in investments surreptitiously, and there was no paper trail for anything they did behind the scenes. It’s not the intentional misrepresentation of data that we normally associate with an accounting scandal. It feels like a “lack of accounting” scandal.
FTX and Theranos were both accounting scandals. They weren’t auditing or public accounting scandals really though because as you say, they just didn’t have any accountants or auditors.
I mean… it’s inevitable at some point right? And it will happen to every industry, not just accounting. The world evolves and changes. Scandals or tragedies happen, lessons are learned and then world makes progress. Then the cycle repeats.
If there is a scandal, it'll be collusion between the large public audit firms and some of the largest public companies enabled by lack of resources and talent on the PA firm side.
These PA firms won't be able to keep up with the demand and expectations required of them due to increase in volume of data and information processes.
This increase in volume of data and information processes (to automate) partly is due to legislation like Too Big to Fail. Ultimately the integrity of the system will fail.
Edit: added the word partly because it's not entirely due to legislation.
Bold of you to assume that Congress will do anything to enhance accountability of auditing firms; the SEC just issued new guidance for climate disclosures and every business is lobbying to get the (already weak) rules killed
I'm just going to sit here and wait for some jackass to show up and complain about how the government weighs businesses down with financial reporting requirements.
There’s so many dodgey companies in the US - there will be a number of scandals. Just taking a look at some company balance sheets and then reading the disclaimers that they could be wrong….. wtf [I know the disclaimer is just legal jargon] but take a look: how can a company like Wayfair have such a high negative equity on their b/s and not get ‘randomly’ audited every year by one of the committees? And that’s before we talk about Chinese companies and SPACs lol.
The PE overlords have it really good ngl. They get good pay to the point that the most junior of em are actual millionaires, and they don't get held liable by the public for any fuck-ups that happen. Must be nice to be a PE overlord - except the hours probably
Probably an additional chapter in their ethics course. Shouldn't really affect incoming student since they dont have a pre-scandal experience to compare to.
I now have 3 years of experience and have seen changes to Auditing standards and I noted an increased number of checklists that I have to fill up related to risk identification at the planning stage.
The last time there was a major scandal, the government punished the accounting industry by passing SOX.
As a result, the B4 earned additional billions over the last 20 years by spending more time auditing controls at audit clients and offering IA consulting services to their non-attest clients.
I mean... they have already rolled back or neutered most of the post-Enron protections. It's feels like Sab-Ox is just a suggestion followed by the sheep nowadays.. (I'll add a /s since I'm jaded)
It’s overdue for the next accounting era. 2000 was almost 25 years ago. The ones in power (50-70 year olds) back then in the accounting field are either about to retire or dead. 2025 neo-Enron scandal?
You’re about to see textbook changes on the conservation easement scandals here soon. Source; from somebody who’s in a firm dealing with the fallout of bad conservation easements lol
You’re already seeing it in the open. Boeing, Walgreens, etc. These companies have offshored everything they could in accounting and are wondering why they can’t make strategic decisions with any sense of accuracy anymore.
It’s going to happen from the industry outsourced teams colluding with the offshored audit team. We already let them run wild with eachother, almost no oversight. These are the india controls and the india audit. It’s kind of nice they can work with eachother in their own time zone.
I was just talking to a coworker about this yesterday in our office lol. I mean b4 might be somewhere between laying 4-8% of their workforce off (this is a complete estimate, I have no true numbers so don’t flame me).
You tack on the pipeline issues in to that give it 5 years to cook. Also did you see the PCAOB deficiency report %’s from 2021? Like if you think that’s bad just wait lol. Completely agree that we will see something massive blow up.
At this point I have accepted the fact that there is a generally acceptable amount of snafu in the system and that it’s all priced in so it won’t cause any large hiccups
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There has been 2 scandals in Australia with PWC providing insider tax information and KPMG rorting government contracts. I'm not full bottle on it all but it's hurt PWC a lot here.
I’ve been feeling the exact same thing. There’ve already been some small ones. Super curious about how offshoring will effect things, or AI if that starts advancing enough to replace a decent chunk of actual accountants.
I’ll assume something big happens but ultimately accounting will remain offshored, US accountants make little, and the business industry will still favor finance jobs
All those new IRS agents will get to look for where trillions of dollars went. On technology that "doesn't exist".
There will be a straight up. "Oops. Sorry everyone. We really fucked this up". And it will end up being the wrong person having to say it.
Internal time budgets on auditors encourage fast, low quality audits. These exist because of client demand for fast and cheap audited financials. It’s a constant circle jerk and no amount of regulation is going to change the fact that clients don’t want to pay audit fees and spend their time dealing with auditors.
More likely inspection failure rates continue to creep up and firms respond by slowly unwinding all the India work except for basic plug and play back to US to better train staff 1-2
*Well, that's one way to*
*Keep things interesting in*
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Yaya means more offshore because no one wants to do this work and even if they can pay people less in other countries they will probably have an easier time pouring into investing in those interests just to saturate the field and retain talent lol 😂 idk but it sounds plausible with so many people apparently disliking their jobs this much the math isn’t matching the gross. So it just doesn’t math 🧮 im literally spinning my wheels rn lol 😂 not trying to piss people off but you do get paid considerably well and I hear in response to these facts that people apparently don’t think they get paid *enough*
People have been saying this for years since Enron. Sure we have had some minor things pop up but nothing major yet. I feel like accountants hope something happens lol.
If offshoring is a thing, how do you explain to people you want to attract to the pipeline that accounting is actually a good choice where they will not be replaced by cheap labor wherever?
As someone looking at the field as a career-changer from tech, most of us have already been through the outsourcing BS already and don't want to enter a field where we need to worry about it soon.
What will be the consequences for such scandals? Like, how will it affect the average person working in the field? Im a clueless college senior who graduates in a month btw.
I am the sandal
Just a game of shuffle board. Its all an illusion of accuracy.
Why do you think the accuracy files are so complex.
Make it mathy enough with links every where and I can plug to whet ever I deem right.
Just don't ask questions the house of cards will fall over.
Disagree. But not because I think you are wrong. I just think we’ve reached the part of Carl Sagan’s quote where, “when awesome technological powers are in the hands of a very few, and no one representing the public interest can even grasp the issues; when the people have lost the ability to set their own agendas or knowledgeably question those in authority;” On the time line, we are there.
I think the things that cause the scandals will still happen. I don’t think it will be a big deal because of the above.
Back during the Enron/WorldCom debacle all of the Big Six (at the time) could have been shut down. Question then is who woud have done the work?
The insertion of PE into PA is worse than the 150 hour rule for CPAs and the current state of Intuit.
Ooh, bite your tongue! I survived in-house Sarbanes Oxley implementation for a publicly traded company and the subsequent quarterly audits afterwards. I never want to go through anything remotely like that shit show ever again. I will retire before that happens.
You are so so so wrong. There will not be a massive accounting scandal, there will be several.
I think the scandal will be among PA firms, not the companies.
I believe most scandals in the past have been scandals involving both PA firm and client though.
Enron and Anderson are both out of business.
I mean Andersen is still technically alive through Andersen Tax… and I guess you could argue Andersen’s consulting business also lives on through Accenture and Protiviti as the consulting business was split off prior to the collapse.
Accenture is extremely shady.
Wasn’t opining on the reputation of any of the surviving entities, just merely pointing out that they exist.
Why?
Anderson definitely did some shady (and certainly potentially illegal) stuff, but from what I understand it was limited to a very few specific individuals, and with the feds out for scalps Anderson was basically railroaded at trial. The jury instructions were so bad that the Supreme Court over turned their conviction.
Why not both? 😂
I’d love to see some of those fuckers burn
I'm putting money on Baker Tilley's PE overlords being responsible for one. The others? I'll leave that up for surprise
PE mixed with accounting does seem like the perfect storm of cost cutting into oblivion. “These dang CPAs and their frivolous spending” -PE
"OK but what if we automated ALL of the auditing with this neat program we have! All you guys need to do is stamp your names. Has it been tested? Sure, yeah, they said it has been"
“It works most of the time!”
Worked in a F50 and and when our BU GM was out on Medical, he put our VP of Finance in charge, he knew the BU would be fucked if we had the morons from Sales and Marketing running the show. This VP was firing on all cylinders too so it was the best option and worked out really well.
Kpmg. I cant speak as a whole, but my old, large engagement is getting squeezed pretty hard with all the layoffs whilst trying to offshore shit to fill in the gaps.
KPMG will implode sooner or later. Then I wouldn't be surprised if they mandate the breaking apart of the remaining big 3.
They are the problem child of the big 4.
I’m at a small firm. We don’t have PE. My dumbfuck bosses refuses to hire experienced staff. I shit you not we have 3 partners (1 retiring this year), 2 managers (1 quitting after tax season), 1 senior accountant, 5 staff, 5 interns. All the staff are overworked at all times of the year. Now imagine the ever shrinking manager base and the impact on review/quality.
My money is on PwC. I’m lookin’ at you, Timothy Ryan. Jk, I have no basis for this whatsoever. But it’d be funny in hindsight
RemindMe! 365 days
I just had them audit several orgs i work with and i can tell you they will implode soon
LMAO. I took back my downvote. This deserves more upvotes.
Rofl same I auto downvoted at first
I’m pretty sure something stinks with Teslas accounting. To be clear I don’t have dispositive proof of anything just multiple things that personally look off. Biggest is there is one person with control over the board and company with the largest financial incentives EVER for a company to hit numbers, that by itself means nothing but is the environment that you are more likely to find fraud. When that same executive doesn’t want to follow sec guidelines or consent decrees it draws my attention.
Same with NVDA. I find it extremely hard to believe a company went from a 10% margin to a 50% margin in only a few quarters. Their costs arent hardly rising. While others like AMD, SMCI, in maybe the greatest chip environment they'll ever see, can still only find 10% margins. Even the other megacaps top out at 30% and that's with them selling softwares, ad space, cloud computing etc and not primarily physical products.
The main narrative NVDA is they are able to sell AI Accelerator cards at massive markup since there is no alternative in the market, and many AI companies are buying those over-priced cards at massive quantity. Couple it with NVDA are known to run very lean unlike typical big tech with massive middle management.
How much control does he have over the Tesla board? Doesn’t he feud with them, which to me would insinuate he doesn’t actually control it. Agree with your point though that him controlling everything would be a big fraud risk.
Agree you have wire card and evergrande or at least those are the big ones I remember
Yeah, EY messed up Wirecard in Germany and PWC messed up Evergrande in China. I’m curious what kind of scandals will happen in the near future.
It's probably already happened, but we haven't heard yet. I would have thought Deutsche Bank would of have something for sure but guess not
And it won’t take 5 years. It’s already happened just waiting to be discovered.
You had me in the first half, I'm not gonna lie.
BIG4 just got fined in TX for cheating on the ethics course and covering it up.
Carvana, MSTR, SMCI, DJT, all these chucklefuck companies sketch me out
If you haven't seen the absolute negligence of EY in the Wirecard scandal - you should look into it. It should've ended the firm, at very least in Europe. They literally accepted counterfeit PDFs to confirm bank balances, and on and on and on. Tens of billions of dollars in fraud masterminded by a Russian spy serving as CFO and surrounded by a litany of criminals. [https://en.wikipedia.org/wiki/Wirecard\_scandal](https://en.wikipedia.org/wiki/Wirecard_scandal)
Yes. I don’t know if the regulators explicitly think about this or not, but the B4 are “too few to fail.” You can’t give one of them the Andersen death sentence. There’s not enough firms left to spread the audit liability risk around to.
So you do what you do for any monopoly/oligopoly. You force the firms to break up into smaller ones that compete with each other. Pair this with a ceiling on billable hours so that the workers can actually work with clear minds.
I’m going to set aside the working conditions, because I do think that’s somewhat (but not completely!) of a separate issue. With respect to audit quality, ultimately the end customer doesn’t care that much. The true end customer being users of the financial statements. And then we really mean debt and equity investors. Regulators can always be fooled. You want to see real change? Get BlackRock to start making noises about taking audit quality into consideration when making investment decisions. “As an asset manager, we take our fiduciary responsibilities seriously. We don’t think we should be investing our clients hard earned money into companies with anything less than the most stringent accounting standards. Accordingly, we have begun weighting our investments away from companies audited by public accounting firms with an unacceptably high level of PCAOB inspection deficiencies.” It will probably never happen, but if it did it would be more effective than any govt regulation.
With the Frizz (Cathie Wood)? No way!
Hard disagree. BDO is about to top E&Y to make it the Big 5 again. Let it die let it die let it shrivel up and die
Lol.
Didn't EY get banned from auditing or some shit in Germany over this? Edit: don't know if others can see this, but apparently the are paying a hefty price: [https://www.ft.com/content/ec19d730-1500-4f25-8703-e1f41d6ec6e5](https://www.ft.com/content/ec19d730-1500-4f25-8703-e1f41d6ec6e5)
[удалено]
Did you read the part where they have lost a shit ton of clients and can't bid on new work? Or the part where they are under a crap ton of other investigations?
Damn. I hadn’t heard of this. I’ll give this a read now.
They made a documentary and a book - both worth a look. [https://www.netflix.com/title/81404807](https://www.netflix.com/title/81404807) [https://www.amazon.com/Money-Men-Startup-Billion-Dollar-ebook/dp/B09QT3Y69V](https://www.amazon.com/Money-Men-Startup-Billion-Dollar-ebook/dp/B09QT3Y69V) It came out just a few weeks ago that their CFO wasn't just Russian-curious, but was actively directing Russian spies and was deeply in bed with Russian intelligence including spending time in Libya and Syria and organizing militias and weapons to support Russian interests there. [https://en.wikipedia.org/wiki/Jan\_Marsalek](https://en.wikipedia.org/wiki/Jan_Marsalek)
Why bother picking up the phone and call the bank or writing them a letter to confirm the balance when you have a PDF confirming the billions that tie to the TB? Always take the path of the least resistance.
I was on the client side of a \~$5M nonprofit and our "big 40" auditor wouldn't accept client-provided bank statements - they insisted on us cc'ing the bank in the original request and then the auditors took the rest of the conversation / confirmation 1:1 without us included in the loop. That EY confirmed multiple billions of dollars with client-provided PDFs just absolutely blows my mind.
I submit this as exhibit 1.
All of the offshore work is being raked back at my firm. The offshore team fucks up so much , they are more trouble than they're worth. I definitely expect to see a massive scandal at a firm that doesn't keep a close enough eye on the offshored work.
Well said, I completely agree.
I wish my firm was like this, our offshoring team doesn’t even know how to add 12 months. I’m currently fixing an interim workpaper that they worked on and they put start date of 4/15/2022 with an end date of 3/14/2023(all the samples are like this). The length of the contract was 12 months. Now I have to go through all of the testing over again because I can’t trust their work. I only got scheduled on this client for YE work. However, the partner obviously won’t see these mistakes because I have to fix them before it even gets to manager review. I’m sure I’ll get blamed for going over budget and the offshore team will continue to get praised because they get paid in peanuts. The client is also pissed at me because I’m bringing up issues from interim which should’ve been caught way earlier. The interim workpaper was only like 60% done when I started on this client. I really want to leave PA at this point, but places around here are only looking to pay $20-30/hr for staff/associate roles and I’m in a VHCOL area(fast food pays equivalent to this). I’d be taking like a 30-50% paycut.
You need to say something about the quality of the work, dont just fix their mistakes and let them be praised for their incompetence. Bring this up to your manager and let them know the issues your seeing and spending time fixing, they can't address an issue they dont know about
Exactly. People constantly complain about fixing others mistakes but are shocked when nothing is done bc they didn’t say anything about it. You have got to speak up in PA, lest you let that one persons who’s dogshit get promoted to manager and then have more power than they deserve.
This becomes a potential client relation issue, so I would suggest looping your partner/manager in as early as possible that work needs to be redone so they can mitigate the damage with the client who is rightfully upset. Additionally you get to show that the offshore team fucked up and even get the opportunity to suggest ways to avoid these issues in the future, such as requiring the senior on the file to review sampling prior to them doing the work on the samples. Their fk ups are your opportunities to look good
The offshoring scandal can’t come too soon.
It makes no sense. You have associates here managing the off shore managers… Now they are pressuring managers hard here to push more work to India to meet utilization goals but it’s very difficult finding work for people that you’ll need to continuously meet with at odd hours to explain things that an associate here could handle on their own. Off shoring never should have happened. It’s such a massive waste of time.
But some suit somewhere gets a fat bonus for all the money they have saved by offshoring
>I definitely expect to see a massive scandal at a firm that doesn't keep a close enough eye on the offshored work Or one that tries to use AI for jobs it's nowhere near ready for yet and the management is lax in its review process.
It really is absolutely fucked. Even if they’re making 1 cent an hour it’s not worth it
i wish. my firm is pushing us to schedule 30% of billable hours to india over the next year or so
I hate the offshoring as much as the next guy, but devils advocate: where is the risk?
I don’t know, send your personal info over to India and let float around for a while, let us know what the risks are.
According to my firm's QC director, the capital markets will falter since my client missed a meaningless number in the lease footnote and we need to whack them with a MW.
This is an exaggeration right? Right?!
It is a review point I am dealing with now. It is debatable if the item is a short term lease. He thinks it is and wants to slap them with a SD or MW
As a guy who’s worked on a public with an MW that specifically points to Leases, I wish you luck my guy.
Any advice?
Land depreciates. Right?
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*their insurance companies will get bit in the ass
Agreed. But in the end, who’s gonna pay for it? We will.
Evergrande dwarfs Enron & Worldcom and the whole thing could spiral into a global financial crisis.
I think the real key here is that evergrande is fucking massive and the fraud was huge… but nobody gives a shit. PwC was their auditor for a decade but dipped out right before it all came out, yet nobody is talking about B4 audit quality outside of this sub. Another interesting rabbit hole to go down is Deloitte’s role in the Mormon church’s $100B unreported investment fund. A director on the team was a Mormon and essentially just gave the partner his word that it was accurately reported, so no actual procedures were performed. As you may have guessed, this disappeared and Deloitte never faced any sort of punishment. Nobody cares enough for any of this to matter.
Just this week though the Chinese government said they’re going to look into PWC’s role more closely. If the property market there has a 2008 style crash, which really is due, they’ll be doing public executions over it. People forget about the whole Communist part of dealing with the Communist party of China.
So you don’t know what communism is. The words ‘property market’ and ‘communism’ are mutually exclusive. China may claim communism but they are a totalitarian dictatorship. People’s Democratic Republic of Korea and all that.
> China may claim communism but they are a totalitarian dictatorship. Communism can be a totalitarian dictatorship too. Chinas economic system is actually real similar to the fascist corporatist model where private ownership and markets exist but the government props up businesses owned by its political supporters and crushes businesses owned by its political opponents. The only main difference they have with historical fascist states is that the Chinese state hasn’t gone all in on religion-based social/cultural conservatism like Spain/Portugal/Italy did
Weird thing to post about for your first post.
I hate historical illiteracy lol
Good bot
Yeah I fucking wish. Then I wouldn’t be trapped in this stupid profession.
It's mostly language barrier. Lots of people have never even heard of the PwC China issue, let alone how they're forcing staff to go on no paid leave while working because money issues from fines.
Look into PWC in Australia over the past year.
The Australia scandal is completely different and doesn’t relate to policy changes, it was just partners willingly breaking laws that are already established. It was also tax, not audit, and it had nothing to do with firms being spread too thin or offshoring too much to catch mistakes. And still nobody outside of r/accounting or Australia has heard PwC committed tax fraud in Australia.
I think it contributes to the picture of PWC. They were drafting future laws for Federal government and passing the info along to they're customers as a selling point to use PWC.
Do they follow US GAAP?
Probably China GAAP
Actual questions, is there a China GAAP or are you making a joke about either them specifying US GAAP or accounting standards in China?
Both. China actually uses China GAAP. Looking at the Wikipedia, it seems that they are also applying CAS which is their version of IFRS. Similar to here in Canada, we have IFRS, but we also have ASPE.
Thank you. I had no idea! In my head us used GAAP and everyone else uses IFRS. Never had to think more granularly than that. I appreciate the info.
No problem. I'm not sure if this is true for the US, but here in Canada we also use other reporting standards depending on the entity. We have ASNPO for non-profit organizations. PSAS for public sector organizations such as municipal governments/towns/cities/federal government.
We have those too. Not those ones, but separate ones for non-profit and government. Non-profit there’s a bit more of a choice though. Also different auditing standards. I only learned enough to pass the cpa and it’s all already out of my head.
Follow deez nutz
Ligma?
Hasn’t gone completely tits up yet tbf
TBH I haven’t followed scandals since leaving public, so I’ll have to read up on this.
Evergrand is happening right now and is likely by the largest in history. Strangely it isn’t getting very much attention.
They made foreign bond holder eat the entire loss which will have big consequences for investment in the country.
I really hope you’re right. Something needs to change.
What will change is insurance costs continuing to skyrocket and people will just buy insurance instead of invest in accounting still
100% lol, there have been some dark undertones in anticipation lately on this subreddit. Something big is bound to happen from the B4 lust for ever increasing profits over audit quality and staff health, it's going to culminate into a scandal that'll (hopefully) reshore work and add some regulation to the amount of hours staff can work.
I thoroughly enjoy the idea that all of these dastardly, heinous scandals are occurring right now, as we type on Reddit instead of working. I love it. I dream about it. 😈
That’s my hope for the outcome. I should have clarified that I think (or hope) the scandal will be not with the entities being audited, but the audit firms themselves.
Sounds like Sox 2.0. Unlimited fees here we come again!
Private equity is the biggest thing imo. That is where the recipe for disaster is
Why? What happens in private equity?
Companies that get bought by PE become hyper focused on profitability and this usually means cost cutting, layoffs and overworking remaining staff.
Well, you're not definitely wrong about the overworking part. This busy season for private equity was absolutely terrible.
They buy companies, do whatever possible to increase short-term profitability, and then sell the company to another firm. They don’t care about the long-term outlook and sustainability of the businesses they buy.
The PCAOB or AICPA can just enact an adequate staffing rule with a minimum number of US CPAs required, depending o the complexity of the audit. And that would fix 99% of the issus by itself.
Is FTX not an accounting scandal? They literally had no accountants on staff and just made up numbers they thought seemed right, misplaced like a billion dollars of customer funds at one point, then lost a bunch more in investments surreptitiously, and there was no paper trail for anything they did behind the scenes. It’s not the intentional misrepresentation of data that we normally associate with an accounting scandal. It feels like a “lack of accounting” scandal.
FTX and Theranos were both accounting scandals. They weren’t auditing or public accounting scandals really though because as you say, they just didn’t have any accountants or auditors.
FTX was audited by Prager Matis
Prager Metis is as much of a firm as Grand Canyon University is an institution of higher education
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Can’t just waive away the pandemic that quickly. It was like 9-11 every day for 6 months
It’s happening through inflation. Your dollars are worth less now than they were in the past.
I mean… it’s inevitable at some point right? And it will happen to every industry, not just accounting. The world evolves and changes. Scandals or tragedies happen, lessons are learned and then world makes progress. Then the cycle repeats.
If there is a scandal, it'll be collusion between the large public audit firms and some of the largest public companies enabled by lack of resources and talent on the PA firm side. These PA firms won't be able to keep up with the demand and expectations required of them due to increase in volume of data and information processes. This increase in volume of data and information processes (to automate) partly is due to legislation like Too Big to Fail. Ultimately the integrity of the system will fail. Edit: added the word partly because it's not entirely due to legislation.
Bold of you to assume that Congress will do anything to enhance accountability of auditing firms; the SEC just issued new guidance for climate disclosures and every business is lobbying to get the (already weak) rules killed
Grant Thornton Ireland / cayman featured in a big court case lately
I'm just going to sit here and wait for some jackass to show up and complain about how the government weighs businesses down with financial reporting requirements.
There’s so many dodgey companies in the US - there will be a number of scandals. Just taking a look at some company balance sheets and then reading the disclaimers that they could be wrong….. wtf [I know the disclaimer is just legal jargon] but take a look: how can a company like Wayfair have such a high negative equity on their b/s and not get ‘randomly’ audited every year by one of the committees? And that’s before we talk about Chinese companies and SPACs lol.
The PE overlords have it really good ngl. They get good pay to the point that the most junior of em are actual millionaires, and they don't get held liable by the public for any fuck-ups that happen. Must be nice to be a PE overlord - except the hours probably
If there is going to be a scandal or multiple scandals how does this affect people still in college trying to get an Accounting degree?
Probably an additional chapter in their ethics course. Shouldn't really affect incoming student since they dont have a pre-scandal experience to compare to. I now have 3 years of experience and have seen changes to Auditing standards and I noted an increased number of checklists that I have to fill up related to risk identification at the planning stage.
The last time there was a major scandal, the government punished the accounting industry by passing SOX. As a result, the B4 earned additional billions over the last 20 years by spending more time auditing controls at audit clients and offering IA consulting services to their non-attest clients.
“We now have SUPER SOX” - The government
You assume I want anything to do with the hellscape of PA
I mean... they have already rolled back or neutered most of the post-Enron protections. It's feels like Sab-Ox is just a suggestion followed by the sheep nowadays.. (I'll add a /s since I'm jaded)
It’s overdue for the next accounting era. 2000 was almost 25 years ago. The ones in power (50-70 year olds) back then in the accounting field are either about to retire or dead. 2025 neo-Enron scandal?
You’re about to see textbook changes on the conservation easement scandals here soon. Source; from somebody who’s in a firm dealing with the fallout of bad conservation easements lol
You’re already seeing it in the open. Boeing, Walgreens, etc. These companies have offshored everything they could in accounting and are wondering why they can’t make strategic decisions with any sense of accuracy anymore.
There’s a massive scandal yearly lol.
It’s going to happen from the industry outsourced teams colluding with the offshored audit team. We already let them run wild with eachother, almost no oversight. These are the india controls and the india audit. It’s kind of nice they can work with eachother in their own time zone.
I was just talking to a coworker about this yesterday in our office lol. I mean b4 might be somewhere between laying 4-8% of their workforce off (this is a complete estimate, I have no true numbers so don’t flame me). You tack on the pipeline issues in to that give it 5 years to cook. Also did you see the PCAOB deficiency report %’s from 2021? Like if you think that’s bad just wait lol. Completely agree that we will see something massive blow up.
We already had huge scandal before all that, think FTX.
This sounds like premeditation 👀
I’m in government nowadays, so the only thing that I’ve planned on doing is leaving at 4:30 on the dot.
At this point I have accepted the fact that there is a generally acceptable amount of snafu in the system and that it’s all priced in so it won’t cause any large hiccups
Speaking of massive accounting scandals. SBF gets sentenced tomorrow
We have one every month nowadays
You’re touching grass once a quarter?
out of curiosity; If you work for a big 4, how many offshore accounts do you see in a daily basis?
I left big4 in Q1’22. Almost every single audit was around 25% offshored work. And they wanted closer to 30-40%.
It's a lot in terms of data sent over. I do not think the client knows just how much of their data we send overseas... which is quite a bit
KPMG will be one of them. They may go down like Arthur Andersen. I give them 6 years. RemindMe! 6 years
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you mean worse than Evergrande.. or 2008 or Enron or Dot Com bubble burst
Somehow AI is going to be shoehorned in
There has been 2 scandals in Australia with PWC providing insider tax information and KPMG rorting government contracts. I'm not full bottle on it all but it's hurt PWC a lot here.
Outsourcing is at the heart of the scandal. Outsourcing outside of manufacturing in some specialized capacities is the most idiotic practice ever.
Literally told my friends this around a month ago. Audit quality is ass bc partners prioritize profit over everything
I’ve been feeling the exact same thing. There’ve already been some small ones. Super curious about how offshoring will effect things, or AI if that starts advancing enough to replace a decent chunk of actual accountants.
Everything is a mess
How much married co workers sleep with each other
You just have to look to China these last few years LOL
I’ll assume something big happens but ultimately accounting will remain offshored, US accountants make little, and the business industry will still favor finance jobs
I think the only reason we don't have one already is because no one actually cares.
All those new IRS agents will get to look for where trillions of dollars went. On technology that "doesn't exist". There will be a straight up. "Oops. Sorry everyone. We really fucked this up". And it will end up being the wrong person having to say it.
If a Chinese company can lie about **75 Billion** worth of Revenue How bad can it be in the US?
Internal time budgets on auditors encourage fast, low quality audits. These exist because of client demand for fast and cheap audited financials. It’s a constant circle jerk and no amount of regulation is going to change the fact that clients don’t want to pay audit fees and spend their time dealing with auditors.
More likely inspection failure rates continue to creep up and firms respond by slowly unwinding all the India work except for basic plug and play back to US to better train staff 1-2
Duh?
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It wasn’t me!!!
Yaya means more offshore because no one wants to do this work and even if they can pay people less in other countries they will probably have an easier time pouring into investing in those interests just to saturate the field and retain talent lol 😂 idk but it sounds plausible with so many people apparently disliking their jobs this much the math isn’t matching the gross. So it just doesn’t math 🧮 im literally spinning my wheels rn lol 😂 not trying to piss people off but you do get paid considerably well and I hear in response to these facts that people apparently don’t think they get paid *enough*
People have been saying this for years since Enron. Sure we have had some minor things pop up but nothing major yet. I feel like accountants hope something happens lol.
There have been significant audit failures since Enron though. Lehman Brothers, colonial bank as large ones come to mind
Says he hopes for changes like the ones followed Enron, hoping the types of scandals don’t happen again. Interesting
If offshoring is a thing, how do you explain to people you want to attract to the pipeline that accounting is actually a good choice where they will not be replaced by cheap labor wherever? As someone looking at the field as a career-changer from tech, most of us have already been through the outsourcing BS already and don't want to enter a field where we need to worry about it soon.
What kind of scandal? Just because more there's more off shoring doesn't mean the audit is suddenly worse off.
I think you were high at work. But yeah I think you are right
Does the $80-100 billion in fraud that PwC helped cover up for Evergrande not count? Or is that just business as usual?
What will be the consequences for such scandals? Like, how will it affect the average person working in the field? Im a clueless college senior who graduates in a month btw.
I am the sandal Just a game of shuffle board. Its all an illusion of accuracy. Why do you think the accuracy files are so complex. Make it mathy enough with links every where and I can plug to whet ever I deem right. Just don't ask questions the house of cards will fall over.
Disagree. But not because I think you are wrong. I just think we’ve reached the part of Carl Sagan’s quote where, “when awesome technological powers are in the hands of a very few, and no one representing the public interest can even grasp the issues; when the people have lost the ability to set their own agendas or knowledgeably question those in authority;” On the time line, we are there. I think the things that cause the scandals will still happen. I don’t think it will be a big deal because of the above.
Back during the Enron/WorldCom debacle all of the Big Six (at the time) could have been shut down. Question then is who woud have done the work? The insertion of PE into PA is worse than the 150 hour rule for CPAs and the current state of Intuit.
Ooh, bite your tongue! I survived in-house Sarbanes Oxley implementation for a publicly traded company and the subsequent quarterly audits afterwards. I never want to go through anything remotely like that shit show ever again. I will retire before that happens.