Lee B Posted May 4, 2023 Report Share Posted May 4, 2023 "The trio of bank failures since March has cast a pall over KPMG’s lucrative business as the largest auditor of the US banking sector. Questions over the quality of its work and independence have mounted in recent days, following the release of a Federal Reserve report into the collapse of Silicon Valley Bank and the forced sale of First Republic. The Big Four accounting firm was auditor to both banks, as well as to Signature, which was seized by regulators in March. In all three cases, KPMG gave the banks’ financial statements a clean bill of health as recently as the end of February 2023." "KPMG alumni have also gone on to play significant roles in the banking sector, including at former clients. The chief executives of Signature and First Republic were both former KPMG partners." IMHO, it's been clear for many years that most large CPA Audit Firms are not truly independent from their clients. Remember Enron and Global Crossings 1 Quote Link to comment Share on other sites More sharing options...
Randall Posted May 4, 2023 Report Share Posted May 4, 2023 Sounds like deja vu all over again. I remember Arthur Andersen auditing companies that went kaput. Gave them clean audit reports. When I was young, I thought auditing was the thing. I never worked in a big firm but did audit work with a small firm auditing local government entities (school boards, cities, etc.). On my own, I audited some small non-profit organizations. I began to feel uneasy about the whole auditing function. I haven't done audit work in years but I am very skeptical about the whole thing. Maybe I'm just old and jaded. If I sound cynical, that's because I am. 5 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted May 4, 2023 Report Share Posted May 4, 2023 48 minutes ago, Randall said: I began to feel uneasy about the whole auditing function. Maybe I'm just old and jaded. If I sound cynical, that's because I am. When I was in college I worked for a CPA. The Audit report said what the client paid for it to say, the higher the fee, the more items were passed on. As a 3rd year accounting student I could see what was going on. That is when I found the EA designation and decided the CPA route was not for me. Old, Jaded & Cynical. Sounds like a 80s rock band on their 2023 world tour. Tom Longview, TX 2 3 Quote Link to comment Share on other sites More sharing options...
JimTaxes Posted May 4, 2023 Report Share Posted May 4, 2023 I worked in audit for a big CPA right out of college. A lot of it was tracing numbers from one source/report to another. It was terrible work. I am so glad I am on my own now doing taxes and small business accounting and payroll. 4 Quote Link to comment Share on other sites More sharing options...
Catherine Posted May 4, 2023 Report Share Posted May 4, 2023 I worked with a CPA auditor when a company I worked for was having an audit. He most specifically did NOT want to look at any of the weird things I was seeing - refused point-blank. At that point I figured an audit was just a useless rubber-stamp paid for to put lipstick on a pig. 2 Quote Link to comment Share on other sites More sharing options...
mcbreck Posted May 8, 2023 Report Share Posted May 8, 2023 Same sort of auditing is in place for SEC and FINRA. 30 years ago we had an SEC auditor in our offices and he tells us our books are clean, he can see it in 20 minutes because they are simple but still had 2 people auditing them for 2 weeks. His example was Prudential Financial but he said something like "we have auditors in their offices year round, we spend weeks figuring out where money was coming / going and by the time we figure it out they change their methods and we have to start over." Personally the FED audit is the one that should matter and the Fed knew Silicon Valley was about to blow up a year before it did and they did nothing about it. We had a former New York Fed Chairman who under Congressional testimony declared he'd never been a bank regulator. The New York Fed IS the primary bank regulator. We had a FINRA audit with 2 guys - one decided a client's kids were stealing from their mother's account and I was liable ($10k per month was being wired to her nursing home). After 6 hours the other auditor looked at it for 5 minutes and pointed to the line where they deposited more money than they withdrew. He declares "why would the daughters deposit an additional $500k into an account where they are stealing $10k per month?" Our last SEC (20 years ago) audit we had two auditors for Monday and Tuesday and one flies home. On Wednesday morning the remaining auditor looks at a money market account and wants proof we'd sent a prospectus to every client of the firm for that account. I told her we didn't and BLOW UP. All day Wednesday she's in conference calls to the home office. Thursday same thing and on Thursday afternoon she schedules us a conference call with management for the next day. On Thursday our secretary tells me something huge is up and we are in trouble. Friday morning I'm sitting in the conference room waiting on people to dial in and she tells me we were required to send out a prospectus. When I mention there is no client money in the account and it's all ours - you could almost see the blood drain from her face. We showed it as an asset of the firm on all our financial statements for years which they thought was also fraud. woops. She flies out 2 hours later having done absolutely nothing of substance. 2 1 Quote Link to comment Share on other sites More sharing options...
Randall Posted May 8, 2023 Report Share Posted May 8, 2023 On 5/4/2023 at 11:48 AM, BulldogTom said: Old, Jaded & Cynical. Sounds like a 80s rock band on their 2023 world tour. I need to get the band back together. 3 Quote Link to comment Share on other sites More sharing options...
Randall Posted May 8, 2023 Report Share Posted May 8, 2023 On 5/4/2023 at 3:05 PM, JimTaxes said: I worked in audit for a big CPA right out of college. A lot of it was tracing numbers from one source/report to another. It was terrible work. I am so glad I am on my own now doing taxes and small business accounting and payroll. We called it 'ticking and checking'. 2 Quote Link to comment Share on other sites More sharing options...
schirallicpa Posted May 8, 2023 Report Share Posted May 8, 2023 I worked for a regional firm as auditor for a couple of years after college. (After interviewing at Pricewaterhouse, where I felt completely overwhelmed with their better than you attitude.) We had a fairly large company that we audited. They had a parent company with 4 subsidiaries. I learned how money was laundered, how profit sharing was manipulated, and how this company's employees could steal money on the lo from the company and customers, as long as it was "immaterial." My job was just to produce paper with checkmarks that indicated everything was good - or any impairment was immaterial. Their fav word. 4 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted May 8, 2023 Report Share Posted May 8, 2023 1 hour ago, Randall said: We called it 'ticking and checking'. We called it "ticked and tied". Everything that tied out to the source documents was tick marked on the trial balance. Tom Longview, TX 1 Quote Link to comment Share on other sites More sharing options...
Catherine Posted May 9, 2023 Report Share Posted May 9, 2023 On 5/8/2023 at 12:32 PM, schirallicpa said: I learned how Hey, once you figure out how to fake "ethics" you've got it made! Which always makes me chuckle at the hours-of-ethics cpe requirements. Either you're (trying your best to be) honest and moral, or you're lying about being honest and moral. 7 Quote Link to comment Share on other sites More sharing options...
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