The accounting oligopoly: What’s next for the Big Four? | CNBC Explains
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- Опубліковано 30 вер 2020
- After some of the biggest financial scandals in history, the future of the big four accountancy firms, KPMG, PWC, EY and Deloitte are at a crossroads. CNBC’s Tom Chitty explains.
The Big Four, in response to queries from CNBC, said that they have taken steps to enhance audit governance, including engaging with the Financial Reporting Council on the principles of operational separation.
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First day of accounting lectures-
Misconception: it is Auditors duty to find out frauds in the company.
I worked for one of the Big 4 and the biggest issue, aside from what this article is stating, is that public companies are increasingly complex; whether its the IT Environment, high-risk financial instruments brought on by clients, increasingly complex governmental standards (both financial and operational), and the markets' constant focus on growth forced the business (clients) and the audit firms to conduct additional (and often unbudgeted) substantive work. I couldn't tell you how many times I felt pressured to operate in the grey area because of audit budget constraints, regulatory deadlines, and client deadlines. As the business environment grows to be more and more complex and globally integrated, audit quality will constantly be at risk of declining across the board.
For all the CPAs in here:
The auditor’s responsibility is to follow the letter of the law, and if you happen to read any of those letters you will realize there are alot of “grey” areas. I have been on both side of the fence and as an auditor most of the times it is about covering just enough ground to protect yourself legally and give your client a pass.
My wife was a auditor. She said it was soul crushing work.
Sorry the general public is clueless about what goes on in any of these big companys.
The workers at these places are given heavy workloads and quality of work suffers. It's a mistake to think that the brand name automatically results in superior quality.
I was a big 4 employee. Auditors don't have the time or the experience to uncover fraud. We just do what the PCAOB tell us to do. It's just a checkbox exercise. Advisory services aren't allowed at audit clients, I am not sure what advisory has to do with any of this.a
Let’s break this down: the firms themselves are paying for these audits. The smaller the auditor, the more they will rely on a particular firm for theIr overall financial viability. Therefore, incentive to look the other way and retain clients - regardless of potential fraud - will be inversely proportional to the size of the auditor. Spin off the consulting portions? Perhaps. But breaking up the auditors themselves is an awful idea. In a world where auditors are paid by the company they’re auditing, competition is actually not a good thing.
Auditing and forensic accounting are totally different.
You guys ever going to talk about the Media olygopoly ?
But it's not the Auditor's job to find fraud. That's for Forensic accounting, which is a completely different service.
Complexity, budget, and time will always be a problem and will only get worse
From my experience with our company working with Deloitte the employees seemed more interested in becoming best friends with our company’s CEO and getting executive levels jobs (where they know nothing of the business side of our industry) that should have instead gone to employees in our corporate office who were working hard. The CEO also gave them millions of dollars to build junk software for our company to use. We have a new CEO now and he seems to have figured out they are more troubled than they’re worth... and thank god for that.
An Auditor's job is to obtain
As a former Big 4 employee, I think Big 4 firms are overrated in every aspect, including their benefits and work-quality. If you want that Big 4 title, go ahead. But the title comes with costs. Personally, I'd recommend mid-tier and local firms that actually listen to their employees and try to provide better working conditions.
Good piece! No noise, good (historical) context, fact-driven
audits are not designed to detect fraud, they only provide a "reasonable assurance" that the financial statements are presented without any "material misstatements". The whole process is wacky since you are essentially paying for scrutiny from someone who you may not want to scrutinize you, creating a conflict of interest.
As a former employee from on of the big four, all I could say is that the procedures are not always the best nor rigorous. I did not be part of the audit team but the obsession with the complacency of the clients is always a big issue. In my opinion there has to be more competition in this industry and stronger laws to avoid this problems.