4 ms·

Did the PwC auditors have skin in the game? Do they have to stand by their decision when questioned or is it just a stamp of approval?

cm2187 6y ago
I don't think they are supposed to give you advice on how to structure it (post the Enron scandal), they are there to say it's compliant or not.
simonebrunozzi 6y ago
There's an old joke / adage in Italian, which goes something like this: A lawyer and a client are discussing an agreement. The lawyer says: here we f* them; here we f* them; here they f* you. Here also. And the client is left asking: why when we f* them it's us, and when they f* us it's just me? This is just to say that, most likely, PwC didn't pay anything, nor any of their lawyers or consultants go to jail.
dan-robertson 6y ago
PwC are a big company and probably are pretty good at avoiding liability for themselves. Once upon a time companies with a partnership structure (eg law firms, accounting firms, private investment banks) were legally partnerships. In a partnership, partners have unlimited joint and several liability, which means that every partner could be held liable to an unlimited amount for anything any partner (or the partnership) did. I think this encouraged partnerships to avoid being liable or doing illegal things. These days there is a legal structure called a limited liability partnership (in the U.K. this was designed specifically for the big accounting companies like PwC) and true partnerships are less common. It’s not obviously a bad thing, unlimited liability is pretty rare these days (people have unlimited liability but usually act through limited liability companies. Lloyd’s underwriters (used to?) have unlimited liability. I can’t think of other examples. Maybe partnership structures were good for keeping people honest but I don’t really understand why a partnership is different from an LLC, and I feel like they don’t scale well to large organisations.
- lmm 6y ago
  > which means that every partner could be held liable to an unlimited amount for anything any partner (or the partnership) did. Technically I believe there's an exception for things that are very clearly the responsibility of a single partner (i.e. done without anyone else's knowledge or consent). > It’s not obviously a bad thing Disagree. We've seen a huge surge in accounting scandals since these accounting firms became limited-liability; the field has become dominated by these "too big to fail" companies who make massive profits while paying tiny penalties for their wrongdoing. > Lloyd’s underwriters (used to?) have unlimited liability. I can’t think of other examples. I believe there's a New York commercial law firm that's still structured as a traditional partnership. > I feel like they don’t scale well to large organisations. Maybe that's a feature rather than a bug.
  - dan-robertson 6y ago
    The firm you’re thinking of is Wachtell, Lipton, Rosen & Katz, but I’d include them in the category of partnerships rather than other examples of unlimited liability.

cm2187 6y ago

I don't think they are supposed to give you advice on how to structure it (post the Enron scandal), they are there to say it's compliant or not.

simonebrunozzi 6y ago

There's an old joke / adage in Italian, which goes something like this: A lawyer and a client are discussing an agreement. The lawyer says: here we f* them; here we f* them; here they f* you. Here also. And the client is left asking: why when we f* them it's us, and when they f* us it's just me? This is just to say that, most likely, PwC didn't pay anything, nor any of their lawyers or consultants go to jail.

dan-robertson 6y ago

PwC are a big company and probably are pretty good at avoiding liability for themselves. Once upon a time companies with a partnership structure (eg law firms, accounting firms, private investment banks) were legally partnerships. In a partnership, partners have unlimited joint and several liability, which means that every partner could be held liable to an unlimited amount for anything any partner (or the partnership) did. I think this encouraged partnerships to avoid being liable or doing illegal things. These days there is a legal structure called a limited liability partnership (in the U.K. this was designed specifically for the big accounting companies like PwC) and true partnerships are less common. It’s not obviously a bad thing, unlimited liability is pretty rare these days (people have unlimited liability but usually act through limited liability companies. Lloyd’s underwriters (used to?) have unlimited liability. I can’t think of other examples. Maybe partnership structures were good for keeping people honest but I don’t really understand why a partnership is different from an LLC, and I feel like they don’t scale well to large organisations.

lmm 6y ago
> which means that every partner could be held liable to an unlimited amount for anything any partner (or the partnership) did. Technically I believe there's an exception for things that are very clearly the responsibility of a single partner (i.e. done without anyone else's knowledge or consent). > It’s not obviously a bad thing Disagree. We've seen a huge surge in accounting scandals since these accounting firms became limited-liability; the field has become dominated by these "too big to fail" companies who make massive profits while paying tiny penalties for their wrongdoing. > Lloyd’s underwriters (used to?) have unlimited liability. I can’t think of other examples. I believe there's a New York commercial law firm that's still structured as a traditional partnership. > I feel like they don’t scale well to large organisations. Maybe that's a feature rather than a bug.
- dan-robertson 6y ago
  The firm you’re thinking of is Wachtell, Lipton, Rosen & Katz, but I’d include them in the category of partnerships rather than other examples of unlimited liability.