..the big professional firms have managed to weather the crisis without any external – or, it would seem, internal – questioning as to whether the way they go about business means they must shoulder some responsibility for what happened. It’s a can of worms that nobody wants to open. - John McManus.
McManus is one of a number of very good journalists writing on the abject failure of governance that is costing us so dearly.
His latest is on the charmed life of a small number of professional service firms who seem to ride on regardless.
IF YOU raise the issue of the dominance of the “big four” accountancy firms – or indeed the “big five” Dublin law firms – with businesspeople it will be greeted with a knowing look, a shrug of the shoulders, eye-rolling or a combination of all three. This is often followed by a reference to Chinese walls, implying that the person you are talking to thinks their existence is slightly less probable than that of the tooth fairy.
But there are rumblings from Brussels that may just stir the pot:
It would appear that the big professional firms have managed to weather the crisis without any external – or, it would seem, internal – questioning as to whether the way they go about business means they must shoulder some responsibility for what happened. It’s a can of worms that nobody wants to open. Nobody, apart from the European Commission, which once again looks like forcing us to face up to things we would rather brush under the carpet.
Last week, the internal markets commissioner Michel Barnier published a Green Paper called Audit Policy: Lessons from the Crisis . It is based on the premise that there is probably something wrong with a system in which banks across Europe got clean audit reports one year, only to collapse under massive unseen losses the next.
It’s a simple premise, but not one that very many seem keen to accept in this corner of Europe.
The pot sure could do with some stirring. As McManus reminds us -
According to the Auditor Comptroller General, PricewaterhouseCoopers – the auditor of Bank of Ireland and Quinn Insurance – has received €5.5 million in fees for services rendered to the Government as it grappled with the banking crisis. This, no doubt, includes the 2008 PwC report saying the banks were all adequately capitalised. KPMG (auditor to AIB and Irish Nationwide) got €2 million while Ernst and Young (the former Anglo Irish Bank auditor) got €240,000. Deloitte, the last of the big four and current Anglo Irish auditor got €420,000.
When it decides to put work out to tender, government likes to include a stipulation that a firm must have done similar work for it previously. It is hard to think of a better way to perpetuate an effective 'closed shop'. Closed shops are bad news.
It is hard to see what the taxpayer got out of statutory bank audits - The Irish Times - Mon, Oct 18, 2010