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It's always incredible how these massive frauds seem to have E&Y looking over their books. How does anyone trust anything they put out?

jojobas 2y ago
Apparently two EY partners did suffer some repercussions. Not Arthur Andersen scale, but CUC wasn't Enron scale either.
jrochkind1 2y ago
Did E&Y not face any consequences here and why not anyway?
ralph84 2y ago
Mutual funds and 401k’s have almost completely divorced shareholders from the companies they own. Most of the supposed checks and balances of public companies are merely performative at this point.
- wdh505 2y ago
  the big thing that changed from Enron is Sarbanes Oxley act which requires that controls (processes) be understood and tested. This is a pretty big deal to all the auditor's "assurance" that they gain in an audit. It is much more than "performative" and it influences every number and disclosure on the financial statements.
  - GartzenDeHaes 2y ago
    SOX was implemented with COBIT 4, Control Objectives for IT. This introduced a lot of process and cost overhead, so COBIT 5 removed the control objectives -- it's just a list of IT topics. So now, corporations can now comply with SOX by doing nothing.
- astrange 2y ago
  BlackRock and Vanguard do try to influence the companies whose shares they manage - that is "ESG" - but people don't really like it when they do it.
monero-xmr 2y ago
Partnerships are run more like guilds than public companies. Many years ago my friend was offered partnership track to a medium-sized accounting firm. It was something like a $1.5 million up front payment to join, but they had partner banks who would give you the loan with a long (30 year?) payoff like a mortgage, so every time a new partner was added it diluted the profits, but all of the existing partners got an immediate payoff. And there are tiers of partners, so a junior partner gets way less profits, like a pyramid (isn't everything like this?). I assume VCs, law firms, and similar partnerships operate the same. So arresting the partners involved in this makes sense, as it is more like a group of individual rainmakers working under one brand rather than a traditional company. And my friend didn't join, instead he switched to small firm where their employees were like strike-force mercenaries. He had a specialised skillset and was willing to move anywhere for a year at a time. Wound up going from ~$150k in 2008 money to over $400k with the insane travel sacrifice schedule, overtime, etc. He is still there but manages the young people doing that while working from home, and makes good money still. I own a highly profitable small-ish business where I want longterm employees, but my incentive is staggering payments so your profits balloon after staying 5 years, but then you have to wait 7 more years to get all of your profits, so each year you get another 7 year profit vesting. So the handcuffs are very reinforced to prevent people leaving. Some people still leave though, but very small turnover at the VP / senior leadership level.
tjpnz 2y ago
They're either very stupid or complicit. Neither should surprise anyone.

jojobas 2y ago

Apparently two EY partners did suffer some repercussions. Not Arthur Andersen scale, but CUC wasn't Enron scale either.

jrochkind1 2y ago

Did E&Y not face any consequences here and why not anyway?

ralph84 2y ago

Mutual funds and 401k’s have almost completely divorced shareholders from the companies they own. Most of the supposed checks and balances of public companies are merely performative at this point.

wdh505 2y ago
the big thing that changed from Enron is Sarbanes Oxley act which requires that controls (processes) be understood and tested. This is a pretty big deal to all the auditor's "assurance" that they gain in an audit. It is much more than "performative" and it influences every number and disclosure on the financial statements.
- GartzenDeHaes 2y ago
  SOX was implemented with COBIT 4, Control Objectives for IT. This introduced a lot of process and cost overhead, so COBIT 5 removed the control objectives -- it's just a list of IT topics. So now, corporations can now comply with SOX by doing nothing.
astrange 2y ago
BlackRock and Vanguard do try to influence the companies whose shares they manage - that is "ESG" - but people don't really like it when they do it.

monero-xmr 2y ago

Partnerships are run more like guilds than public companies. Many years ago my friend was offered partnership track to a medium-sized accounting firm. It was something like a $1.5 million up front payment to join, but they had partner banks who would give you the loan with a long (30 year?) payoff like a mortgage, so every time a new partner was added it diluted the profits, but all of the existing partners got an immediate payoff. And there are tiers of partners, so a junior partner gets way less profits, like a pyramid (isn't everything like this?). I assume VCs, law firms, and similar partnerships operate the same. So arresting the partners involved in this makes sense, as it is more like a group of individual rainmakers working under one brand rather than a traditional company. And my friend didn't join, instead he switched to small firm where their employees were like strike-force mercenaries. He had a specialised skillset and was willing to move anywhere for a year at a time. Wound up going from ~$150k in 2008 money to over $400k with the insane travel sacrifice schedule, overtime, etc. He is still there but manages the young people doing that while working from home, and makes good money still. I own a highly profitable small-ish business where I want longterm employees, but my incentive is staggering payments so your profits balloon after staying 5 years, but then you have to wait 7 more years to get all of your profits, so each year you get another 7 year profit vesting. So the handcuffs are very reinforced to prevent people leaving. Some people still leave though, but very small turnover at the VP / senior leadership level.

tjpnz 2y ago

They're either very stupid or complicit. Neither should surprise anyone.