{"id":31616,"date":"2018-02-26T07:14:33","date_gmt":"2018-02-26T12:14:33","guid":{"rendered":"http:\/\/olduvai.ca\/?p=31616"},"modified":"2018-02-26T07:14:33","modified_gmt":"2018-02-26T12:14:33","slug":"its-not-only-carillion-thats-built-on-sand-its-our-whole-system-of-corporate-accountability","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=31616","title":{"rendered":"\u201cIt\u2019s Not only Carillion that\u2019s Built on Sand, it\u2019s our Whole System of Corporate Accountability\u201d"},"content":{"rendered":"
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\u201cIt\u2019s Not only Carillion that\u2019s Built on Sand, it\u2019s our Whole System of Corporate Accountability\u201d<\/a><\/h3>\n<\/header>\n
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The construction & services giant collapsed even as KPMG signed off on its financial statements; now they deny any responsibility.<\/strong><\/p>\n

The Big Four accountancy firms \u2014 PricewaterhouseCoopers, Ernst & Young, KPMG, and Deloitte \u2014 reported combined annual revenues<\/a> of $134 billion in 2017. In the global audit arena, they are virtually unassailable. In the US, the Big Four audit<\/a> 497 of the S&P 500 companies. In the UK, they audit<\/a> 99 of the FTSE 100 companies. In Spain there\u2019s not a single firm listed on the IBEX 35 whose accounts are not audited by one of the Big Four.<\/p>\n

But what are the Big Four firms actually good for?<\/p>\n

Given the oligopolistic structure of the global audit industry as well as the potential conflicts of interest that can arise between the auditors\u2019 myriad roles, this is a vital question \u2014 and one that is finally being asked by British lawmakers following the epic crash-and-burn of the services and construction giant Carillion<\/a>.<\/p>\n

In recent years, the external and internal auditors of Carillion, KPMG and Deloitte, pocketed<\/a> a combined \u00a340 million for their services. Yet they abjectly failed to discover, and warn investors of, the company\u2019s precarious condition that caused it to collapse in spectacular fashion in January. Many other market players, including major investors, pension covenant assessors, and hedge funds shorting Carillion stocks on the markets \u2014 some with access to the accounts, others without \u2014 saw warning signs long before its demise. So, why didn\u2019t the auditors make sure that the company discloses those problem to investors?<\/p>\n

Carillion\u2019s external auditor, Dutch-seated KPMG, signed off on its accounts without fail to the very bitter end, even though it was clear that Carillion had wafer-thin profit margins and was dangerously overloaded with debt, including some \u00a32.6 billion worth of pension liabilities, and that between 2012 and 2016 it ran up<\/a> debts and sold assets just to continue paying out dividends to shareholders.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

\u201cIt\u2019s Not only Carillion that\u2019s Built on Sand, it\u2019s our Whole System of Corporate Accountability\u201d The construction & services giant collapsed even as KPMG signed off on its financial statements; now they deny any responsibility. The Big Four accountancy firms \u2014 PricewaterhouseCoopers, Ernst & Young, KPMG, and Deloitte \u2014 reported combined annual revenues of $134 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[18955,18953,12428,5660,18954,18956,4255],"class_list":["post-31616","post","type-post","status-publish","format-standard","hentry","category-economics","tag-carilion","tag-corporate-accountability","tag-deloitte","tag-don-quijones","tag-kpmg","tag-pricewaterhousecooper","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31616","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=31616"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31616\/revisions"}],"predecessor-version":[{"id":31617,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31616\/revisions\/31617"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=31616"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=31616"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=31616"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}