Court case lays bare KPMG's crimes: poaching employees from its own regulators and making them steal government secrets

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The closest analogy here is what happened with AIG during the 2008 crisis: AIG was the insurer that investigated and rated all the weird, complex derivative bonds that the big banks were issuing – and AIG also depended on those banks to pay its bills

It was the same with the supposedly independent bond-rating agencies, and no changes have been made in the years since. There’s a built-in flaw when the agency that rates a company is also paid by that company and not by those doing due diligence on the company. We’re basically setting ourselves up for a repeat of 2007-2008.


…according to generally accepted accounting principles, if you know what I mean, and I think you do.

I have a couple of IRA CD’s, which are sorely depleted, and a blast from the past in the form of a defined benefit pension from a company that has not existed for over thirty years. That cute, little pension almost covers my monthly cable bill, so there’s that.


As someone who has worked with all four of the big accounting firms with audits at various enterprises over the last 20 years…

You get what you pay for with them.

If you work with them in full disclosure and pay for them to come in and examine your financial systems and financial records to find your compliance and non-compliance with best practices and GAAP, and to make recommendations as to how to better comply with best practices and GAAP in the future, that is what they will do; they will help your company grow and become better with more accurate reporting.

On the other hand, if you bring them in and pay them to validate that you meet GAAP and best practices, they will validate that you do; regardless of what the actual situation is.

Enterprises that view this as an opportunity to find ways to make their accounting better gain a lot from the companies. But it is very hard, and requires change. Companies that just want a check mark gain a relatively useless check mark from the company. It is very important for the company to understand which it is buying, and impossible for someone outside the business to understand which one they got. For an investor or regulator, the approval of one of the big 4 accounting firms means absolutely nothing. (Interestingly enough, useless check marks cost the same as or more than a real audit, but require far less employee involvement and no change.)

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I find this to be quite accurate. Even after my company wrote software to compete with what they do, it’s still tough to compete since a real human is getting paid more than the software license amount to say what they’re being paid to say. ‘disrupting’ audits is a tall order …


This is the part that drives me nuts. We hire a painter to paint our house, they get the key and clean us out and then we hire the same painter next time. “Well, what else are we going to do?” is the rationale.

  1. Paint the house yourself
  2. Don’t paint the house

Both, not matter how bad, are better options.


I’m an auditor. First with the DoD, and now as for a state auditing cities, schools, fire districts, etc.

I have to review CPA firm work. They don’t do as deep an audit as we do. Granted, my state has one of the most rigorous sets of requirements, and we are backed by legislation to be do what we do, but we often refer to CPA work as check boxed. A lot of what I see is a list of requirements and that it was checked off. In most cases, we have to redo all the work, because it’s not up to what we require.

It’s the worst ever, because first I get excited that might have that audit work already performed, then I look into it, and grumble as I have to redo it all over because it was not that rigorous. Then I have to tell my client they are being charged for me to audit it all over again, because it didn’t meet standards after they paid the CPA firm. That never goes over well.


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