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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

#181

Post by selimthegrim »

looping__lui wrote: post #139
_fat_santa wrote: post #120

Earlier quoted context omitted.

They are "professional scapegoats" IMO, companies pay them to take the blame and their business model seems to be: collect fees, do an "audit", pay the fine, keep the spread.

No. This is nonsense. You audit accounts that are falsified and give thumbs up: you close shop, are held liable for damages and could go to prison. Auditing companies are crucially important for a working economy. Bank loans, bonds, equity markets would all be chaos and fraud mayhem without them.

Exactly what good did Moody’s do with 2008 and SVB?

Re: EY gets banned from new audit business in Germany

#182

Post by looping__lui »

selimthegrim wrote: post #181
looping__lui wrote: post #139

Earlier quoted context omitted.

No. This is nonsense. You audit accounts that are falsified and give thumbs up: you close shop, are held liable for damages and could go to prison. Auditing companies are crucially important for a working economy. Bank loans, bonds, equity markets would all be chaos and fraud mayhem without them.

Exactly what good did Moody’s do with 2008 and SVB?

Moody, Standard & Poors and Fitch are RATING agencies.

RATING agencies are different from AUDITING companies different from CONSULTANCIES.

Rating agencies were somewhat restructured after 2008 (but are still kind of edgy) - because they did literally write AAA on a piece of paper for money. But there ratings were opinions and had no real legal meaning.

Re: EY gets banned from new audit business in Germany

#183

Post by jkukul »

euix wrote: post #148
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…

> there is really no expertise within the national government level handle complex tax and accounting situations and they are instead all outsourced to these firms.

worth mentioning that the complex tax situations are the effect of lobbying of the big four firms in the first place.

Re: EY gets banned from new audit business in Germany

#184

Post by whimsicalism »

55555 wrote: post #152
euix wrote: post #148

Earlier quoted context omitted.

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…

Yeah but then the experts at the big 4 are 23 year old grads with no experience. I don't get it.

I worked in government and they were still obviously smarter than the gov workers. Experience is not everything and I think that should actually be a major lesson from government employment practices.

Re: EY gets banned from new audit business in Germany

#185

Post by chinabot »

23B1 wrote: post #179

I worked at Accenture as an MD for several years, primarily on innovation and transformation programs. I have plenty to say about them, but I think the key driving factor for all of the grift and awful performance has a lot to do with how they operate, which is to sell in a big program, then pull a switcheroo and try and pack a project with as many low-paid MBAs as possible – kids straight out of college tasked with…

Lets face it, the answer from chatGPT would be almost identical to what these consultants say, however the main reason for consultants is to CYA so if the decision is bad, you can blame someone else.

Re: EY gets banned from new audit business in Germany

#186

Post by ksec »

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…

>They are mainly used as proxies to make decisions managers dont want to be responsible for.

Interesting I just watched a video [1] on consulting yday. It is on something similar happening in the UK. And another video ( couldn't find it ) that suggest unless there are some other interest for these consultant, ( like outsourcing certain function to certain clients ) all they do is to make a case for what the management wanted to do anyway, and rubber stamp on it. And mostly because management wanted something on their CV / resume, so they could move on to another job and repeat the same process again.

[1] https://www.youtube.com/watch?v=Aj2od-Jpanw

Re: EY gets banned from new audit business in Germany

#187

Post by eastbayjake »

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.

That was Booz Allen Hamilton, they are a government subcontractor that largely provides long-term staff augmentation... totally different type of professional services than strategy consultants or even system integrator (SI) shops like Accenture and Deloitte.

Re: EY gets banned from new audit business in Germany

#188

Post by krn »

SilverBirch wrote: post #168

I don't know if I have just enough knowledge to be dangerous, but it seems to me that auditors don't really do what people think they do. Auditors seem mainly to just double check the numbers they're handed. This serves a purpose, it provides some level of guarantee that companies that are acting in good faith are generally reporting correct numbers. Auditors don't do what people seem to think they should do - invest…

> Well ok, but was EY less competent than McKinsey or did they just get unlucky that they're the poor bastards who stepped on the landmine?

I have asked myself the same question, before I noticed that EY is basically the Credit Suisse and the SoftBank of the audit world[1]:

> EY has been involved in many accounting scandals: Bank of Credit and Commerce International (1991), Informix Corporation (1996), Sybase (1997), Cendant (1998), One.Tel (2001), AOL (2002), HealthSouth Corporation (2003), Chiquita Brands International (2004), Lehman Brothers (2010), Sino-Forest Corporation (2011), Olympus Corporation (2011), Stagecoach Group (2017), Wirecard (2020), Luckin Coffee (2020) and NMC Health (2020).

In fact, Wirecard managed to partner with EY, Credit Suisse, and SoftBank simultaneously just before going bankrupt.

Maybe because no reputable companies wanted to touch it?

[1] https://en.wikipedia.org/wiki/Ernst_%26_Young#Accounting_sca...

Re: EY gets banned from new audit business in Germany

#189

Post by avianlyric »

galleywest200 wrote: post #67
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…

Is it possible to have declared bankruptcy with no creditors? Can you just spend all of your own money down to zero? Would you still be banned due to losing only your own money?

I think it would be very difficult to achieve, you would somehow need to convince a bankruptcy court to accept your bankruptcy, despite having no creditors.

If you spend all your money down to zero, then the normal thing is to just have your company dissolved and struck of the companies register. For which there is no consequences, you just tell the state your business is no longer operating, they make a note of that, and that’s it. Business dissolved, you get on with your day.

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