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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

#141

Post by mlyle »

LadyCailin wrote: post #118
mlyle wrote: post #68

Earlier quoted context omitted.

Digging into his post history to avoid refuting his point (which is overstated) is ... not appropriate? great? I can pretty easily agree with a weaker version of his statement: regulations have a disproportionate impact on small entities. They're expensive to comply with, and small entities tend not to have access to the exotic legal tricks and arms-length interaction with regulations that can make them much less eff…

For the first one, if we can agree the regulation is good, then so be it. If your business can only thrive by hurting other people, you don’t get to be in business, that isn’t a more fundamental right than not being harmed by businesses. For the second, the solution is to plug loopholes that allow businesses of any size to bypass regulations. In no case is it the correct solution to get rid of good regulations.

> For the first one, if we can agree the regulation is good, then so be it.

IMO: If we can agree that the regulation has a net good effect, considering externalities and adverse effects. Having a "good regulation" that also increases concentration of control in an industry can end up being a net negative.

> For the second, the solution is to plug loopholes that allow businesses of any size to bypass regulations.

This is a nice thing to strive for, but in practice layers of indirection and ample legal counsel accomplishes a lot even in well-run democracies (even leaving aside how large organizations often influence how they are regulated in both direct and indirect ways).

Re: EY gets banned from new audit business in Germany

#142

Post by looping__lui »

detuur wrote: post #121
baxtr wrote: post #111

Earlier quoted context omitted.

[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.

No. The article this hate comment responded to talked about auditing.

McK and BCG do consultancy and don’t do auditing.

The one certifies your car is safe on the street and is held liable if they didn’t inspect properly.

The other is a car tuning operation that doesnt certify anything but gives you an edge on the racetrack. Or you hope it does.

Re: EY gets banned from new audit business in Germany

#143

Post by johnwalkr »

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…

"Exposure: Inside the Olympus scandal: How I Went from CEO to Whistleblower" is a great book that is in part about fraud by mergers and acquisitions.

Re: EY gets banned from new audit business in Germany

#144

Post by amrb »

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…

The big four prop up the business world, status quo.

Say your a large company listed on the stock market, so pick from the four big companies because serious companies use them, who's the CFO an ex-account from the big four who knows their orderand process.

Now if no other companies can enter that bubble, are we really surprised at the outcome!?

Re: EY gets banned from new audit business in Germany

#145

Post by 331c8c71 »

looping__lui wrote: post #136
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…

McKinsey and BCG do not audit companies. They are consultancies and do not certify accounts to be “correct and legit”. Think of auditing companies a little bit like of vehicle inspection shops certifying your car is safe for the road. Consultancies are not doing that. I’m not sure why certain businesses should be “banned” because YOU believe they do not add value. Do you pay them? No. It’s not correct that they are p…

> I’m not sure why certain businesses should be “banned” because YOU believe they do not add value. Do you pay them? No.

Yes, whenever they are hired by the public sector. http://recreation.gov is one example in the US I know about.

Re: EY gets banned from new audit business in Germany

#146

Post by looping__lui »

331c8c71 wrote: post #145
looping__lui wrote: post #136

Earlier quoted context omitted.

McKinsey and BCG do not audit companies. They are consultancies and do not certify accounts to be “correct and legit”. Think of auditing companies a little bit like of vehicle inspection shops certifying your car is safe for the road. Consultancies are not doing that. I’m not sure why certain businesses should be “banned” because YOU believe they do not add value. Do you pay them? No. It’s not correct that they are p…

> I’m not sure why certain businesses should be “banned” because YOU believe they do not add value. Do you pay them? No. Yes, whenever they are hired by the public sector. http://recreation.gov is one example in the US I know about.

So the public sector should not hire private contractors in general. State it like that then.

How is a mismanagement of consultants by public sector entities a justification to “ban” an entire sector?

Re: EY gets banned from new audit business in Germany

#147

Post by Aperocky »

smugma wrote: post #84
Aeolun wrote: post #82

TBH, I don’t understand why anyone would be naive enough to hire EY and then actually trust them.

As a publicly traded company, you have to hire auditors. If you don’t like EY you can go to PwC, KPMG or Deloitte, but what’s the difference?

the incentives are misaligned.

Publicly traded company should pay a small fee to SEC each year and they be responsible to hire auditors, for everyone. Or even better, market bid for auditors with incentives for finding irregularities.

With the current line up of incentives, auditors merely ensures any fraud are slightly better hidden.

Re: EY gets banned from new audit business in Germany

#148

Post by euix »

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…

My partner works at one of these big four companies and the way she puts it - they essentially function as outsourced expertise for governments the world over - essentially expert functions have been hollowed out of state governments and into the private sector and thus there is really no expertise within the national government level to handle complex tax and accounting situations and they are instead all outsourced to these firms.

We should really consider the present western world as some sort of marriage of corporatism and government - they are really hand in hand as two sides of the same coin.

Re: EY gets banned from new audit business in Germany

#149

Post by qwytw »

looping__lui wrote: post #146
331c8c71 wrote: post #145

Earlier quoted context omitted.

> I’m not sure why certain businesses should be “banned” because YOU believe they do not add value. Do you pay them? No. Yes, whenever they are hired by the public sector. http://recreation.gov is one example in the US I know about.

So the public sector should not hire private contractors in general. State it like that then. How is a mismanagement of consultants by public sector entities a justification to “ban” an entire sector?

Well the least they can do is force band auditing companies from offering consulting services because that is a clear conflict of interest..

Re: EY gets banned from new audit business in Germany

#150

Post by AbrahamParangi »

wongarsu wrote: post #103
AbrahamParangi wrote: post #58

Earlier quoted context omitted.

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.

Does it? You could equally well argue that punishing CEOs for bankruptcy makes banks more willing to lend money, improving the business climate. And of course for startups in the early years it's not that relevant anyways, since nobody will lend you anything until you have revenue. VCs invest instead of lending and aren't owed anything if you shut the company down.

Well, you’re basically taking something (cost of capital) that could be priced (via interest rates and collateral requirements) and turning it into a regulatory barrier. Personally I doubt that that is better, and I think the general consensus is that it is quite a bit harder to do business in those places with these regulations.
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