Accounting & Auditing Archives - Page 5 of 11 - Emile Woolf writes

Words: weapons of mass destruction?

Concepts, like Plato’s “forms”, exist in the world of ideas. Compared with their myriad manifestations, the concepts of, say, “window”, “chair” or “coin” exist in the mind, immutable and unchanging. Similarly, our structured accounting lexicon began with broad acceptance of its underlying concepts. These criteria were treated as assumptions, laying the groundwork for that other […]

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Auditing the auditors: some improvement. But what of the economy?

The audit failures I have been highlighting so regularly are given full exposure in the Financial Reporting Council’s latest report on big-firm audit quality in the UK. Adverse findings relate to the usual suspects: goodwill impairment, revenue recognition, IT controls and loan loss provisions. Although quality (or lack of it) varies between the four top […]

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If management breaks the law, don’t penalise the shareholders

Most penalties for financial wrongdoing are levied on institutions rather than the inventive executives who master-mind these grubby manoeuvres. Regulatory authorities themselves do not benefit from the fines they collect, now amounting to serious money – over £500 million in this year alone. Apart from relatively modest retentions to cover regulators’ costs, the money is […]

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You can print money, but not direct its course

Legal claims against top Wall Street banks arising out of the financial crisis have, so far, settled at over $100 billion, and no doubt there will be more. Claims against audit firms for their involvement will surely follow, and it will be interesting to see how far IFRS-compliance will serve as the defence of choice.  […]

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Loan book valuations – accounting standards’ greatest challenge

  The Parliamentary Commission on Banking Standards recommended that the “expected loss “ model should replace the existing  “incurred loss” model in IFRS – in other words, that the concept of “prudence” should be reinstated in the accounting framework. In support, the European Parliament has instructed the European Central Bank to undertake stress tests on […]

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Sloppy auditing has its consequences – just look around you

My repeated warnings to auditors that compliance with IFRS does not guarantee accounting truth and fairness appear to have struck a resounding chord in high places: the House of Lords, to be precise, where the Parliamentary Commission on Banking Standards debated the Bill on banking reform, now enacted by Royal Assent. In Hansard for 23 […]

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Auditors, wasted loans, currency wars… and gold

I noted last month that the record of auditors’ ability to assess the worth of banks’ loan portfolios is singularly uninspiring. In the US the Securities and Exchange Commission is actively pursuing auditors who issued clean opinions after accepting management’s assurances of worth, followed by massive bailouts. Yet any meaningful audit is impossible when supposed […]

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Auditing banks’ toxic debts

AUDITING BANKS’ TOXIC DEBTS Ever since the financial markets registered their massive tumble in 2008, when Lehman Brothers was left to drown in its swamp of toxic debts, banks’ managements, regulators, rating agencies and auditors have been muttering that banks must rebuild their balance sheets in line with successive Basel capital adequacy criteria. Their auditors, […]

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Competition amongst auditors – not the answer

Have auditors learned more from the 2008 financial crash than economists? The high priests of the dismal science refuse to recognise that the world has changed, though their discreditied theories continue to collapse about their ears.  Any serious penetration of the causes of collapse are not in the university syllabus, which now reads more like […]

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Hiding the truth with complexity: trust your own reason

When I started writing for this magazine over 40 years ago the editor was a wise old owl called Geoffrey Holmes. During a conversation on some thorny accounting controversy Geoffrey would slyly suggest that I tackle it in my next article. It was no use suggesting a different subject – he would simply look at […]

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