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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

#121

Post by detuur »

baxtr wrote: post #111
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…

[flagged]

Seems to me the comment is a concise, if clearly one-sided, narrative of misaligned incentives of the consulting industry and its particular role in the difficulties that the Dutch healthcare providers experienced during the pandemic.

Hardly an appeal to hate.

Re: EY gets banned from new audit business in Germany

#122

Post by anonymouskimmer »

AbrahamParangi wrote: post #58
avianlyric wrote: post #40

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? There’s a big difference between bankruptcy and business failure. Plenty of businesses fail without entering bankruptcy, they’re wound down responsibly and their creditors are repaid in full. If a company fails due to bankruptcy, then it means that people who lent money to that business are out of pocke…

The counterpoint is what's the point of reducing losses on bankruptcy if it makes the entire business climate worse? By trying to protect creditors you just make everyone poorer.

Screwing over the bond market by screwing over owners of your company's bonds make the entire investing and general retirement and pension climates worse. Retirements and pensions are often guaranteed in part by the government, with tax funds. Tax increases and retirement deficits directly hit consumers in their ability to consume, and at least a few years back consumers were responsible for about 2/3rds of GDP (in the US, at least), so a bit more important than the business climate itself.

And that's without even factoring in the effect of bankruptcy on consumers employed by the bankrupt company. Employees of a bankrupt company are considered the highest level of unsecured creditors, but they still come behind secured creditors. So bankruptcy can not only result in an employee (who is also a consumer in the more general economy) losing their job, but losing their last paycheck and benefits coverage. Which has a consequent effect not only on consumption, but on utilization of public, tax- or fee-supported services.

---

If a person bankrupts a company, they could probably use 5 years to let all of the lessons that they should have learned sink in. If you fail out of school you have to retake your classes in order to graduate.

Re: EY gets banned from new audit business in Germany

#123

Post by DANmode »

baxtr wrote: post #115
wouldbecouldbe wrote: post #114

Earlier quoted context omitted.

It's not hate, it's accountablity. They are very powerful and rich institutions in the Western world that are able to make billions, of which a large part tax payers money and have in many cases a negative impact.

[flagged]

I'm reading a displeased comment because of a possible connection to one of the listed firms, or a similar one.

Maybe unintended. But that's what I read into it.

Re: EY gets banned from new audit business in Germany

#124

Post by detuur »

martinald wrote: post #95
simplotek wrote: post #85

Earlier quoted context omitted.

> 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) r…

The 5-year ban is not an automatic outcome, I believe. Afaik it's imposed specifically in cases of gross mismanagement/fraud.

Re: EY gets banned from new audit business in Germany

#125

Post by oxfordmale »

version_five wrote: post #101
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…

This article is about auditing, your comments appear to be about consulting / advisory businesses. Otherwise, I mostly agree, though I don't support a ban. It's a complex topic - companies are free to waste money how they want, and even governments do need real advice. It's just too bad they pick such shitty advisors to support decisions they've already made instead of actually seeking good advice.

Yes, companies should be free to waste their money as they want. However, auditors serve a purpose and that is to identify any fraudulent activities. In the case of Wirecard, EY failed at this.

Re: EY gets banned from new audit business in Germany

#126

Post by appleiigs »

baxtr wrote: post #115
wouldbecouldbe wrote: post #114

Earlier quoted context omitted.

It's not hate, it's accountablity. They are very powerful and rich institutions in the Western world that are able to make billions, of which a large part tax payers money and have in many cases a negative impact.

[flagged]

I think your comment is worse in nature than OP. Are you adding any counter-ideas to the conversation or just complaining? And now I'm complaining about your complaining.

Re: EY gets banned from new audit business in Germany

#127

Post by brookst »

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?).

So as a super talented CEO, would you take any jobs trying to save a failing company?

Re: EY gets banned from new audit business in Germany

#128

Post by vajrabum »

version_five wrote: post #101
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…

This article is about auditing, your comments appear to be about consulting / advisory businesses. Otherwise, I mostly agree, though I don't support a ban. It's a complex topic - companies are free to waste money how they want, and even governments do need real advice. It's just too bad they pick such shitty advisors to support decisions they've already made instead of actually seeking good advice.

Advice for money at least at the top level is in the long run always going to end up bad advice. The incentives are pretty much all about lining up more work for the firm.

Re: EY gets banned from new audit business in Germany

#129

Post by DANmode »

mpweiher wrote: post #89
Kamq wrote: post #78

Earlier quoted context omitted.

I mean, fair, but when even the Americans are saying to let the investors lose their shirts, you might want to at least think about it.

This isn't about investors, it's about creditors.

Investors and/or startup loans, depending on structure, are generally right at the top of the list of creditors.

Re: EY gets banned from new audit business in Germany

#130

Post by Cazafr »

lumost wrote: post #42
calderarrow wrote: post #37

Earlier quoted context omitted.

Auditors have access to all the financials, but they only audit a statistically significant sample, because it would be incredibly expensive to audit every transaction. Fraud can be easily detected if one employee is committing it. Fraud is substantially harder to find if two employees are involved, specifically 2 employees involved in internal controls. For instance, if you have a policy that all checks paid over $1…

Curious, this seems like a good place to deploy AI tooling. If I’m involved in internal controls, I’ll know what the auditors look for. If an AI can augment the auditors to find more suspicious transactions such as to companies with no employees, or conflicts of interest - I could probably find more fraud.

Ex-IT Auditor and I agree. I was screaming for automation in the audit process for years and nobody would listen. Many of the employees are burnt-out and hate their jobs. My prediction is that governments will decide to audit companies using some kind of AI and report back any findings to shareholders, while ensuring correct taxes are paid. Big 4 has 5 years max to pivot their business or they're going to die.
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