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EY gets banned from new audit business in Germany

economist.com

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Re: EY gets banned from new audit business in Germany

#91

Post by akiselev »

charlieyu1 wrote: post #69
Timon3 wrote: post #39

Earlier quoted context omitted.

It's the wrong take-away to say all regulations only hurt small sellers. Do you want to give up regulations on child labor, or worker safety, or foods and drugs? If not, how come, considering it all hurts only small sellers? The problem isn't the concept of regulation, but the follow-through on loopholes. By doing away with regulations you'll decrease quality of life for most people. Instead we have to find ways to r…

I don't think small sellers have anything to do with child labour. And since you mentioned loopholes, it is always the big players who get away with loopholes that small business owners do not

Small sellers aren’t worth even going after until they reach a certain size for huge swaths of the regulatory regime.

See, for example, UL/CE and FCC regulations - unless they burn something down or interfere with emergency services, businesses can usually defer the regulatory cost till they can afford it. Or the FAA, which gives out slaps on the wrist like its going out of style, as long as the offender is not an airline.

Case in point: many countries allows underage family members to work for family businesses and even the ones that don’t, barely enforce it. A factory hiring dozens of kids? That’s a lot less likely to go unnoticed.

Re: EY gets banned from new audit business in Germany

#92

Post by rvba »

nimbix wrote: post #23
rvba wrote: post #8

Audits in general are such a joke. Rubber stamping and checks done by students or graduates who barely understand what they are doing. And even if they detect something, it is considered as not material and ignored. From business perspective the auditors are clueless. I dont claim that audits are bad, they are very needed. But the execution in many ways is so poor.

I worked at a company that had to deal with EY as a part of a tech certification. Tha auditors barely knew why they were being sent over. Out managers and techs had to explain the process to them and assure them the numbers in the report were correct. The auditors happily accepted that, and then charged around 100k. Top job.

That is a standard audit of any BIG4 company.

Re: EY gets banned from new audit business in Germany

#93

Post by Cantinflas »

wouldbecouldbe wrote: post #83

EY, Mckinsey, Accenture, BCG all of them should be banned. They were the big proponent of the the just in time management principles in the hospitals in the Netherlands. Then when covid came they were the first the market on twitter & linkedin for advice how to improve your health inventory & deal with covid challenges. Serious impact with zero skin in the game. These consultants are parasites. They are mainly used a…

Agree about the proxy part for the consultancy business, it should be common knowledge and those manager should be fired

Re: EY gets banned from new audit business in Germany

#94

Post by [deleted] »

ck45 wrote: post #17
jll29 wrote: post #5

If a CEO mismanages and goes bankrupt, they cannot start another company for 5 years; a two-year ban seems mild, but better than nothing, as the reputational damage is substantial (why would any non-criminal pick EY afterwards in good faith if there are others?).

It would be an interesting idea to make auditors fully accountable like bankruptcy advisors. I know, this is never going to happen.

[deleted]

Re: EY gets banned from new audit business in Germany

#95

Post by martinald »

simplotek wrote: post #85
shortrounddev wrote: post #29

Earlier quoted context omitted.

Really? 5 years? That seems really harsh. Is it all business failures or does it have to be due to mismanagement? I've heard the climate is very hostile to businesses in Germany; my sister in law was trying to sell art on etsy and apparently she had to get a business license to do so in Germany. She's now back in the USA where she can just sell stuff online and the only thing she needs to do is file her taxes correct…

> Really? 5 years? That seems really harsh. Bankruptcy is not a mild consequence. People can and often are ruined by a bankruptcy, not to mention the harsh impact that it has on employees who are suddenly forced out of a job. Declaring bankruptcy should not be considered as something mundane or yet another run-of-the-mill managerial decision. Also, not being able to found a company is not what I would call "harsh". E…

But a lot of businesses fail for reasons other than the directors "mistakes". The general macro trend has a lot to do with it. Should the owners of a cafe or bar that went under owing suppliers some money during covid be banned from starting a new business? Or someone who buys a failing business trying to turn it around and failing also be barred for 5 years?

At the end of the day, creditors must (and generally do) realise when supplying a limited liability company there is a risk that the company goes under you won't get paid. That's why credit insurance and credit control departments exist.

If the directors were committing fraud by misrepresenting the state of the business and it fails, that is a completely different thing and directors should be barred from trading. But businesses fail all the time and we must accept that. Barring people from trying again for 5 years isn't a great solution imo.

Re: EY gets banned from new audit business in Germany

#96

Post by ryzvonusef »

crazygringo wrote: post #31

> Auditors insist that their services cannot be treated as a guarantee that accounts are truthful, and note that sophisticated frauds are by their nature difficult to spot. As someone who knows nothing about this area, I don't understand why audits won't always detect fraud. I would naively assume that auditors have access to all financial accounts and records of cash flows and they make sure they all add up and are…

   > As someone who knows nothing about this area, I don't understand why audits won't always detect fraud.
as some one who studied accounting and auditing, here is a page from my text:

https://kfknowledgebank.kaplan.co.uk/audit-and-assurance/aud...

but the tl;dr is that auditors don't provide "insurance", they provide "assurance", specifically reasonable assurance.... that the accounts are "true and fair"

or to be put it in even simpler terms, they can't guarantee something fishy did or didn't happen, the transaction scope is just too much, they will "try their best" and do enough of a check to say if anything fishy pops put.

    > Is it just a top-level glance at the numbers because there isn't enough time/money to scrutinize everything?
yes you hit the nail right on the head. Of course things have changed, govt have put their own requirements in addition to auditing standards, but still that's an adequate summary.

the more through of a check, the more difficult, time consuming and expensive it becomes, and at some point the fraud becomes cheaper than the audit.

but even more importantly is the mentality. There is a phrase we were taught "Auditor is a watchdog and not a bloodhound" that kind of explains what auditors are supposed to do.

----

i left the field but i'll try to answer to the best of my ability

Re: EY gets banned from new audit business in Germany

#97

Post by ChuckNorris89 »

tom-from-july wrote: post #72
ChuckNorris89 wrote: post #30

Earlier quoted context omitted.

>she had to get a business license to do so in Germany. She's now back in the USA where she can just sell stuff online If you want to sell in the Germany, get a business license from Estonia or Romania or some other low-cost low-bureocracy EU country, and pay your taxes there. Germany is still living in the business climate of the '60s.

This is terrible advice and you or actually your Estonian company will be fined for tax fraud. In Germany income is taxed where it is generated, which includes the head of the person running the business. So if you run your foreign company from Germany - which is expect to be the case if you have no physical permanent office in Estonia, where you also have to be regularly present - you home is considered to be an bus…

>In Germany income is taxed where it is generated

Only if you're a resident in Germany, But if I live somewhere in the EU and sell something to someone living in Germany I don't owe income tax to the German government.

I pay my income tax where I'm a fiscal resident (Estonia, Romania, etc.)

Re: EY gets banned from new audit business in Germany

#100

Post by martinald »

tom-from-july wrote: post #72
ChuckNorris89 wrote: post #30

Earlier quoted context omitted.

>she had to get a business license to do so in Germany. She's now back in the USA where she can just sell stuff online If you want to sell in the Germany, get a business license from Estonia or Romania or some other low-cost low-bureocracy EU country, and pay your taxes there. Germany is still living in the business climate of the '60s.

This is terrible advice and you or actually your Estonian company will be fined for tax fraud. In Germany income is taxed where it is generated, which includes the head of the person running the business. So if you run your foreign company from Germany - which is expect to be the case if you have no physical permanent office in Estonia, where you also have to be regularly present - you home is considered to be an bus…

Which single person doesn't need limited liability though? In my experience small freelancers/businesses need that protection much more than bigger organisations, which can afford legal fees and court costs if things go south.

If you are a freelancer trading without a corporate entity you can get screwed so hard. There are nasty people out there that will take advantage of this and can demand loads of free work or refunds, knowing that your entire personal wealth is on the line.

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