4 ms·

Companies hire their own auditors. No audit partner wants to have to go find new clients, so they bend over backwards to appease the existing one. The partners

Companies hire their own auditors. No audit partner wants to have to go find new clients, so they bend over backwards to appease the existing one. The partners do the math of “I’d rather have a 1% chance of my client blowing up than a 50% chance of having to find replacement revenue is a zero sum game” Unfortunately, what’s rational for individual audit partners isn’t rational for the firm as a whole. And this is why Enron/Anderson happened. And Wirecard.

hef19898 6y ago
Aren't they supposed to change every couple of years, under SOX, exactly to prevent auditors and clients becoming to intimate? Mind you, Wirecard was a German company, so SOX didn't apply. Also, government oversight was kind of limited, it only applied to the German banking activities. While SOX can be a pain, there are very valid reasons for it. Hopefully Germany learns its lesson and implements something similar after Wirecard.
- hef19898 6y ago
  Just found an article in the FAZ claiming that since early 2019 BAFIN was investigating accounting issues. The assignment was handed over to one guy...
- TaylorSwift 6y ago
  You change partners, but that usually means it's the same partner working in the same group and so all know each other really well. Also, that doesn't mean anything since the team can stay the same. Partners would question the work and can look at it, but rarely any partner would bother to go into the bank statement and make sure the work is tied out. They are too "above" that. That responsibility falls onto the senior and managers, and in many instances incompetence or laziness from those staff will let things go through. It's very tedious work, and it's annoying to do the same thing for 8+ hours a day for a month or two. In the end, the team just want things to tie out, and make whatever documentation is necessary to make sense of things. No need to upset the client or partner and lose the potential business.

hef19898 6y ago

Aren't they supposed to change every couple of years, under SOX, exactly to prevent auditors and clients becoming to intimate? Mind you, Wirecard was a German company, so SOX didn't apply. Also, government oversight was kind of limited, it only applied to the German banking activities. While SOX can be a pain, there are very valid reasons for it. Hopefully Germany learns its lesson and implements something similar after Wirecard.

hef19898 6y ago
Just found an article in the FAZ claiming that since early 2019 BAFIN was investigating accounting issues. The assignment was handed over to one guy...
TaylorSwift 6y ago
You change partners, but that usually means it's the same partner working in the same group and so all know each other really well. Also, that doesn't mean anything since the team can stay the same. Partners would question the work and can look at it, but rarely any partner would bother to go into the bank statement and make sure the work is tied out. They are too "above" that. That responsibility falls onto the senior and managers, and in many instances incompetence or laziness from those staff will let things go through. It's very tedious work, and it's annoying to do the same thing for 8+ hours a day for a month or two. In the end, the team just want things to tie out, and make whatever documentation is necessary to make sense of things. No need to upset the client or partner and lose the potential business.