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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

#271

Post by jasmer »

krn wrote: post #188
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),…

E&Y and McKinsey are not remotely in the same business.

E&T are accountants who double check that your financials are what they say they are.

McKinsey are management consultants who generally do strategic projects, and/or facilitate other consultants to actually do work.

Re: EY gets banned from new audit business in Germany

#272

Post by rejectfinite »

bitL wrote: post #104
tom-from-july wrote: post #72

Earlier quoted context omitted.

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…

That's why one should just move to Dubai and escape Germany and its crazy taxes and health insurance costs.

ah yes move to a dystopian slave state in a fucking desert

Re: EY gets banned from new audit business in Germany

#273

Post by 23B1 »

Eisenstein wrote: post #260
tranchms wrote: post #259

Earlier quoted context omitted.

It’s true. I work as a Client Partner for a $1B+ consulting firm that comes in and cleans up after these situations. We bring in seasoned, experienced consultants with the functional knowledge that these big consulting firms don’t have. And even though our consultants are more costly on a per head basis, we’re more cost effective overall, because we do more with less. I always admired the big consulting firms until I…

I'm a bit confused because this isn't my industry. What exactly are these consultants doing? What are they supposed to 'deliver'?

Well lets say you're a guy who runs the 10-year-old analytics platform for your company; your team's job is to deliver a bunch of charts and data to the executive team on the performance of the company on a weekly basis.

That's not an easy job, because you've got a shitton of unstructured data, new data sources coming online all the time, and a patchwork of analysis tools. This work would be a hell of a lot easier and more accurate and maybe even cheaper in the long run if you had an analytics layer that was more modern - but you don't have time to make the case to the CIO, because you're too busy just running the reports and doing the job that you're paid to do.

However, maybe a guy like me is having a convo with his client the CIO and she says "Y'know, Eisenstein thinks we need a new analytics plat, but he's busy on five other projects – can I pay you $5k to take a look at it and make me some recommendations?"

So I can sit with you, get your hot take, maybe bring in one of my guys who is shit-hot on dozens of analytics platforms, show you and your boss the trade-offs, costs, etc. If I'm lucky maybe you'll even hire one of my guys for a couple of months to install it and train you and your team up on it.

Way cheaper than interviewing and trying to do an apples-to-apples comparison between a dozen different analytics companies who're all gonna lie to your face about how their product is the best, probably politically better that you don't miss a full quarter of you doing your job, and your boss also gets to look good when I ship a sexy deck that shows how we're going to integrate all her peers' pet systems and provide much more timely, accurate, and readable results.

(I made this all up out of whole cloth, but the bottom line is sometimes incentives are aligned as such that a middle man can help you get there faster, cheaper, and better than DIY. On the other hand, consultants can also make things WAY worse as this thread illustrates)

Re: EY gets banned from new audit business in Germany

#274

Post by 23B1 »

ethbr0 wrote: post #255
23B1 wrote: post #247

Earlier quoted context omitted.

Nailed it. My only beef is that when you’re going line-by-line on the deliverables, arguing over the “definition of done” that you’re actually crushing whatever good will and budget remains for the innovation a company actually needs. And when I say innovation I don’t mean gravity boots, I just mean a progressive use of robust tech, easily understood processes, and a general aversion to complexity - so you don’t have…

I've always thought that if it gets to the point where a consultant and company are arguing over line items and it didn't go so badly as to preclude future work , then just meet in the middle, call it a poorly run project, and try and do better next time. There's no good outcome from a knock-down, drag-out fight for either party when it goes that badly. And yeah... I've observed my fair share of "So, we all agree we'…

The good P&L owners make it right and eat the marginal loss because they know long term relationships are more important than a single contract. That is generally how I ran my line – but I have had a very small number of extremely toxic/litigious clients and so I'll go the distance with them, line-by-line, make sure we've got 'done' in writing. It sucks but some people are just jerks.

Re: EY gets banned from new audit business in Germany

#276

Post by cgeier »

hestefisk wrote: post #268
Jolter wrote: post #227

Earlier quoted context omitted.

Interesting, but how does your experience relate to the linked story? Is EY somehow related to Accenture? Are Accenture also doing auditing?

Accenture was spun out of Andersen Consulting after the Enron saga. Andersen had both a consulting business and an audit arm - they were one of the “big five” audit firms before the collapse of Enron. Today, Accenture only do consulting; they do zero auditing. EY are not related to Accenture or Andersen. EY is an audit firm (one of the “big four”) with a massive consulting arm. Unlike Accenture which is a global firm…

before the Enron scandal

Re: EY gets banned from new audit business in Germany

#277

Post by cgeier »

jasmer wrote: post #271
krn wrote: post #188

Earlier quoted context omitted.

> 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),…

E&Y and McKinsey are not remotely in the same business. E&T are accountants who double check that your financials are what they say they are. McKinsey are management consultants who generally do strategic projects, and/or facilitate other consultants to actually do work.

EY also has a management consulting arm, not sure how successful they are though.

https://www.ey.com/en_gl/strategy-transactions/strategy-serv...

Re: EY gets banned from new audit business in Germany

#278

Post by cgeier »

tim-- wrote: post #228
hef19898 wrote: post #220

Earlier quoted context omitted.

Well, EY started as part of Andressen (?) and was as such part of the Enron scandal. We shouldn't ignore the scandal of the century. EY so is a very reputable accounting firm. Unreputable would be the Metaverse headquartered shop FTX used.

You might be thinking of Accenture, which was founded from the ashes of Andersen Consulting. Andressen is one half of Andreessen Horowitz (a16z) which (I think?) doesn't have any connection to Enron.

It wasn't, it was spun out before Enron.

Re: EY gets banned from new audit business in Germany

#279

Post by wil421 »

truetraveller wrote: post #266
ethbr0 wrote: post #245

Earlier quoted context omitted.

On the consulting side of the audit firms that you're talking about, I think people misunderstand why companies hire big consultancies. It is not for performance. It's for minimizing risk . And not "risk that the project will fail to hit its schedule." Rather "risk that the company is unable to deliver the thing we're asking for at all." When I've seen big consultancies fail, it almost always goes like this: (1) big…

Actually I disagree strongly. It's primary because blame shifting. You know, "no on got fired for buying IBM". Also, to confirm a C-execs "vision". He can always say " agrees with this too".

> Also, to confirm a C-execs "vision". He can always say " agrees with this too".

This is the crux of it. GP described the process but not the reasoning. Consultancy come in to help management push a vision. One or two VPs may not be able to get their vision but if one of the big 4 supports them it will likely be easier to get buy in.

Re: EY gets banned from new audit business in Germany

#280

Post by ClumsyPilot »

qwytw wrote: post #153
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…

So just bring in another CEO just for the bankruptcy. Currently that's not an uncommon practice in the US. Of course this new CEO would have to be a one-use fall guy with somebody else actually doing the job... > If you prove yourself unable use that privilege responsibly Good luck determining whose actually to blame and who is innocent... at the end of the days only unlucky small to medium business owners who can't…

> Good luck determining whose actually to blame and who is innocent...

I really dislike this attitude, lawyers, engineers and auditors are liable in case of negligence. Why should CEO's be excluded from liability?

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