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Has the Accountancy Profession got big questions to answer?


clearmurk

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Apr 27, 2012
Messages
3,019
I have mused for some time as to how Banks, which had been audited as “going concerns” could, in some cases, a few months later collapse into insolvency.

It seems this question, which might usefully have been addressed had an inquiry been undertaken into the activities of Banks and their associates, is troubling many others in the UK.

At least the issues around prudential accounting, or the lack thereof, are getting a hearing there.

IFRS under fire at Parliamentary hearing | AccountingWEB

EU negligence on accounting standards allowed Irish banks to conceal losses - The Irish Times - Mon, Jan 21, 2013

Accountants ignored company law and protected bankers - The Irish Times - Mon, Jun 04, 2012
 

lying eyes

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Joined
Apr 27, 2009
Messages
4,417
I have mused for some time as to how Banks, which had been audited as “going concerns” could, in some cases, a few months later collapse into insolvency.

It seems this question, which might usefully have been addressed had an inquiry been undertaken into the activities of Banks and their associates, is troubling many others in the UK.

At least the issues around prudential accounting, or the lack thereof, are getting a hearing there.

IFRS under fire at Parliamentary hearing | AccountingWEB

EU negligence on accounting standards allowed Irish banks to conceal losses - The Irish Times - Mon, Jan 21, 2013

Accountants ignored company law and protected bankers - The Irish Times - Mon, Jun 04, 2012
Yes--Yes--Yes and if not, they are not fit for purpose.
 

emulator

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Oct 20, 2010
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10,262
Has the Accountancy Profession got big questions to answer?

Yes.

I would qualify that with saying not all of them.... there are plenty of decent and honest accountants I'm sure.
 

Analyzer

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Feb 14, 2011
Messages
46,201
Some accounting firms have very large questions to answer.

As indeed does the Central Bank of Ireland, the Department of Finance, the Financial Regulator and the ESRI.

Really serious and significant questions.
 

Sync

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Aug 27, 2009
Messages
28,845
I'd say the auditing profession rather than accounting (which is a small but relevant difference)
 

bob3367

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Joined
Jan 11, 2007
Messages
8,083
I have mused for some time as to how Banks, which had been audited as “going concerns” could, in some cases, a few months later collapse into insolvency.

It seems this question, which might usefully have been addressed had an inquiry been undertaken into the activities of Banks and their associates, is troubling many others in the UK.

At least the issues around prudential accounting, or the lack thereof, are getting a hearing there.

IFRS under fire at Parliamentary hearing | AccountingWEB

EU negligence on accounting standards allowed Irish banks to conceal losses - The Irish Times - Mon, Jan 21, 2013

Accountants ignored company law and protected bankers - The Irish Times - Mon, Jun 04, 2012
Yes they do, not so much the bog standard company accountant, but the auditors.

They have failed, and the thing is the introduction of IFRS was meant to counter all this....

But first we had Pollypeck, then Cendant, a company I worked for, and then Enron....these are the ones in the public eye, there would be many more.

As an accountant, we are all then tarred with tge same brush, a tarring that I can assure people isnt just in the majority.
 

Sister Mercedes

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20,663
Yes. They made money from shaky audit reports on the way up, and they're making even more money from insolvency and liquidations on the way down.
 

meriwether

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Dec 1, 2004
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12,604
Has the Accountancy Profession got big questions to answer?

Yes.

I would qualify that with saying not all of them.... there are plenty of decent and honest accountants I'm sure.
An accountant would be proud of that qualified statement.
 

bob3367

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Jan 11, 2007
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8,083
Yes. They made money from shaky audit reports on the way up, and they're making even more money from insolvency and liquidations on the way down.
Who else can do insolvency and liquidations?
 

gerhard dengler

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Feb 3, 2011
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47,554
Yes they do, not so much the bog standard company accountant, but the auditors.

They have failed, and the thing is the introduction of IFRS was meant to counter all this....

But first we had Pollypeck, then Cendant, a company I worked for, and then Enron....these are the ones in the public eye, there would be many more.

As an accountant, we are all then tarred with tge same brush, a tarring that I can assure people isnt just in the majority.
We've had IFRS, IAS, Sarbannes Oxley...................we have annual reports of quoted companies that run to literally hundreds and hundreds of pages disclosing tonnes of information.

And yet we still have companies who'll try to get away with all kinds of chicanery.
 

bob3367

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We've had IFRS, IAS, Sarbannes Oxley...................we have annual reports of quoted companies that run to literally hundreds and hundreds of pages disclosing tonnes of information.

And yet we still have companies who'll try to get away with all kinds of chicanery.
Forgot about Sarbannes Oxley, and yes they still attempt it.....
 

Analyzer

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Feb 14, 2011
Messages
46,201
....well the accountancy profession does count Dithering Bertie amongst it's ranks ? So, yes, it appears to be the case.

Unless his qualifications there are as dodgy as everything else about him, and they can exile him.

eh...we should not be surprised, if they are.
 

bob3367

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Jan 11, 2007
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Yes, good old SOX.
Them Yank companies really love their SOX :)
I am a avid red sox fan, and laughed when the abbreviation came out.

When I was in the Oil and Gas industry we had an SSOP, copied from a FASBY....
 

stopdoingstuff

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Feb 26, 2011
Messages
22,897
The auditing standards themselves are the problem. Audits can easily be fixed to comply with the required level of testing. First, you can test on a sample basis and the sample size does not have to be all that big compared to the overall balance.
Next, there is a type of testing called substantive analytical testing, which basically allows the auditor to make up some bulls-t expected result and work on the basis of a degree of tolerance- this is so easily abused.
Then there is the reliance on third party documentation- if you want to prove something by getting it verified by a third party, but that third party is part of the scam too, then good luck trying to prove that.
Then there is a standard requiring the auditor to consider if he is too close to the client- this involves a trainee ticking a box to make sure they are not too close to the client!!!
So yeah- audits prove nothing.

Audits simply cannot be thorough
 

bob3367

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Jan 11, 2007
Messages
8,083
The auditing standards themselves are the problem. Audits can easily be fixed to comply with the required level of testing. First, you can test on a sample basis and the sample size does not have to be all that big compared to the overall balance.
Next, there is a type of testing called substantive analytical testing, which basically allows the auditor to make up some bulls-t expected result and work on the basis of a degree of tolerance- this is so easily abused.
Then there is the reliance on third party documentation- if you want to prove something by getting it verified by a third party, but that third party is part of the scam too, then good luck trying to prove that.
Then there is a standard requiring the auditor to consider if he is too close to the client- this involves a trainee ticking a box to make sure they are not too close to the client!!!
So yeah- audits prove nothing.

Audits simply cannot be thorough
It can if proper books and files are kept, like a fangled dangled thing called a monthly audit file with proper refetences.
 

davoid

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Joined
Feb 16, 2011
Messages
9,711
....well the accountancy profession does count Dithering Bertie amongst it's ranks ? So, yes, it appears to be the case.

Unless his qualifications there are as dodgy as everything else about him, and they can exile him.

eh...we should not be surprised, if they are.
What accountancy body was he a member of?
 
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