Comments on: The ongoing financial crisis: Where were the auditors? http://blog.oup.com/2009/03/corporate_governance/ Academic insights for the thinking world. Tue, 18 Jun 2013 14:01:09 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Institutional Investors and Corporate Governance Reform : OUPblog http://blog.oup.com/2009/03/corporate_governance/#comment-156103 Institutional Investors and Corporate Governance Reform : OUPblog Wed, 06 Jan 2010 07:24:23 +0000 http://blog.oup.com/?p=3476#comment-156103 [...] of Birmingham. She is the author of Corporate Governance and she blogs with fellow OUP author Bob Tricker at Corporate Governance. The below post, on institutional investors and corporate governance [...] [...] of Birmingham. She is the author of Corporate Governance and she blogs with fellow OUP author Bob Tricker at Corporate Governance. The below post, on institutional investors and corporate governance [...]

]]> By: Divide and Conquer? Splitting the Roles of Chair and CEO : OUPblog http://blog.oup.com/2009/03/corporate_governance/#comment-153959 Divide and Conquer? Splitting the Roles of Chair and CEO : OUPblog Wed, 21 Oct 2009 07:13:50 +0000 http://blog.oup.com/?p=3476#comment-153959 [...] of Birmingham. She is the author of Corporate Governance and she blogs with fellow OUP author Bob Tricker at Corporate Governance. The below post is an adapted version of one found on that blog, and is [...] [...] of Birmingham. She is the author of Corporate Governance and she blogs with fellow OUP author Bob Tricker at Corporate Governance. The below post is an adapted version of one found on that blog, and is [...]

]]> By: Say on Pay : OUPblog http://blog.oup.com/2009/03/corporate_governance/#comment-150045 Say on Pay : OUPblog Wed, 08 Apr 2009 07:32:16 +0000 http://blog.oup.com/?p=3476#comment-150045 [...] of Birmingham. She is the author of Corporate Governance and she blogs with fellow OUP author Bob Tricker at Corporate Governance. The below post is an adapted version of one found on that blog, and is [...] [...] of Birmingham. She is the author of Corporate Governance and she blogs with fellow OUP author Bob Tricker at Corporate Governance. The below post is an adapted version of one found on that blog, and is [...]

]]> By: Deniz Kiral http://blog.oup.com/2009/03/corporate_governance/#comment-149881 Deniz Kiral Mon, 30 Mar 2009 05:43:44 +0000 http://blog.oup.com/?p=3476#comment-149881 I just got out of a Big-4 firm, most auditors, including partners, couldn't spell the word derivative, let alone value one. I just got out of a Big-4 firm, most auditors, including partners, couldn’t spell the word derivative, let alone value one.

]]> By: Rock http://blog.oup.com/2009/03/corporate_governance/#comment-149624 Rock Wed, 11 Mar 2009 15:53:26 +0000 http://blog.oup.com/?p=3476#comment-149624 The author oversimplifies and misses two important points: - Auditors are not the sole sentinels of shareholder and societal interests. There are others for such a role, not least the regulators and state and federal authorities that have the power to check management's decisions, or the credit rating agencies, whose decisions have significant impact on the decisions of management. - There is a big distinction between opining on the integrity of accounts & internal controls and opining on the benefits to society from pursuing a given business strategy or risk taking activities. It was never the job of auditors to question the business strategy and the level of risks being taken by management. If auditors start to opine on management decisions on risk taking and resource allocation, they should not be opining on the integrity of accounts. There would be major independence issues in such a scenario. Auditors' role in opining on the integrity of the asset valuation is a fair topic for discussion, but not the overall role of auditor's as a verifier of accounts. All members of society had a hand in the current crisis; e.g., individual greed of homeowners and buyers of securitized products are no less culpable than the Directors or Management. We should be careful in any attribution analysis, and not overreach to force a conclusion that may not be valid. The author oversimplifies and misses two important points:

- Auditors are not the sole sentinels of shareholder and societal interests. There are others for such a role, not least the regulators and state and federal authorities that have the power to check management’s decisions, or the credit rating agencies, whose decisions have significant impact on the decisions of management.

- There is a big distinction between opining on the integrity of accounts & internal controls and opining on the benefits to society from pursuing a given business strategy or risk taking activities.

It was never the job of auditors to question the business strategy and the level of risks being taken by management. If auditors start to opine on management decisions on risk taking and resource allocation, they should not be opining on the integrity of accounts. There would be major independence issues in such a scenario.

Auditors’ role in opining on the integrity of the asset valuation is a fair topic for discussion, but not the overall role of auditor’s as a verifier of accounts.

All members of society had a hand in the current crisis; e.g., individual greed of homeowners and buyers of securitized products are no less culpable than the Directors or Management. We should be careful in any attribution analysis, and not overreach to force a conclusion that may not be valid.

]]> By: Antonis Papageorgiou http://blog.oup.com/2009/03/corporate_governance/#comment-149590 Antonis Papageorgiou Mon, 09 Mar 2009 11:07:09 +0000 http://blog.oup.com/?p=3476#comment-149590 From the very early stages in our profession we were told that auditors need to be independent and that independence is a state of mind. The tone from the top determines the mind set. The ‘top’ for the audit firms is the environment in which companies and audit firms alike operate. Maintaining the right environment is the responsibility of the individual governments as well as of the international institutions. We need regulation that addresses the substance of the matter on a local and on a global level. We need monitoring to ensure that proper principles apply within the environment in which we all operate. In our world honest and moderate professionals are an endanger species. What prevails is that what is good for us it must be also 'ethical’. Profit is the driving force regardless of any long term consequences. It is true that the audit profession is a big business and that there is an expectation gab the outcome of which we are currently experiencing. From the very early stages in our profession we were told that auditors need to be independent and that independence is a state of mind.
The tone from the top determines the mind set.
The ‘top’ for the audit firms is the environment in which companies and audit firms alike operate. Maintaining the right environment is the responsibility of the individual governments as well as of the international institutions. We need regulation that addresses the substance of the matter on a local and on a global level. We need monitoring to ensure that proper principles apply within the environment in which we all operate.

In our world honest and moderate professionals are an endanger species. What prevails is that what is good for us it must be also ‘ethical’.

Profit is the driving force regardless of any long term consequences.

It is true that the audit profession is a big business and that there is an expectation gab the outcome of which we are currently experiencing.

]]> By: James G. Shriver http://blog.oup.com/2009/03/corporate_governance/#comment-149550 James G. Shriver Thu, 05 Mar 2009 03:18:56 +0000 http://blog.oup.com/?p=3476#comment-149550 Several years ago, before the demise of our firm,an article appeared in the editorial section of the Wall Street Journal,recommending that the audit arrangement should go through an insurance company. The author pointed out that the shareholders were seeking assurance and this could be provided by the insurance company arranging a policy that would be supported by an audit examination under its responsibility, with the entity being covered paying a policy fee based on the insurance risk established based on the result of the audit examination. Several years ago, before the demise of our firm,an article appeared in the editorial section of the Wall Street Journal,recommending that the audit arrangement should go through an insurance company. The author pointed out that the shareholders were seeking assurance and this could be provided by the insurance company arranging a policy that would be supported by an audit examination under its responsibility, with the entity being covered paying a policy fee based on the insurance risk established based on the result of the audit examination.

]]> By: Posts about Mortgage Market Report as of March 4, 2009 | Real Estate Market Reports http://blog.oup.com/2009/03/corporate_governance/#comment-149535 Posts about Mortgage Market Report as of March 4, 2009 | Real Estate Market Reports Wed, 04 Mar 2009 17:19:01 +0000 http://blog.oup.com/?p=3476#comment-149535 [...] published by Stephen Slivinski at Cato Institute. Its report, estimates that in 2006 the federal The ongoing financial crisis: Where were the auditors? - blog.oup.com 03/04/2009 Bob Tricker was the founder-editor of Corporate Governance: … of [...] [...] published by Stephen Slivinski at Cato Institute. Its report, estimates that in 2006 the federal The ongoing financial crisis: Where were the auditors? – blog.oup.com 03/04/2009 Bob Tricker was the founder-editor of Corporate Governance: … of [...]

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