When I was in London, I received a newspaper (The London Evening Standard) when I entered the underground. I started reading it and what I found was an article about E&Y.
What we know from Lynn’s previous blog, is that E&Y is struggling a tough period. Now again, there are some doubts about the report on Lehman Brothers (which went bankrupt in 2008). Quite cynical, I received the newspaper in Canary Wharf just in front of the building where Lehman used to be established.
The Financial Reporting Council, the supreme body that controls auditing firms as E&Y, asks further explanations on the report. There is doubt that E&Y reacted not decisively enough. If you ask me, I would no longer have faith in E&Y, I do not believe in their impartiality.
The biggest problem is the way that auditors are paid. They receive their wages by the companies itself. Auditors are appointed by the shareholders. Their job is to judge if the annual report is correct or not, so they can protect the shareholders. I definitely think that auditors condone when directors pay them more. It is nonsense to believe that everything happens fair in auditing. Money can convince everyone.
The article propose a new way to pay auditors: In state of paying auditors by the companies, the auditors can be paid by the FRC. The FRC can recover the money of the company. In my view this is the fairest way. This has a big advantage: there would be no longer doubt that auditors revised their meaning when the company tried to persuade the auditor with money. In my reckoning, there will be always fraud and companies can still try to convince the auditor.
Read the article
Notice that the article was longer in the newspaper
Notice that the article was longer in the newspaper
In my opnion, I think that paying the auditors by FRC is better. In this way, there is more control at the auditors. As Laurens said, there is indeed always a possibility to commit fraud, but with FRC the fraud can decrease.
BeantwoordenVerwijderenDeze reactie is verwijderd door de auteur.
BeantwoordenVerwijderenI'm also convinced there will always be companies who are trying to commit fraud, such as E&Y. It's really outrageous that people act dishonestly just for money. In my view, these firms should be severely punished, however fraud will always exist!
BeantwoordenVerwijderen