As the first few weeks of 2018 unfold, several high profile corporate scandals have already emerged with the role of auditors again under intense scrutiny; including Carillion in the UK, Colonial Bank in the US, and Satyam in India.
Our recent “Auditing the Big 4 Accounting Firms” report is now freely available via this link, which was originally published on 23 October 2017 and released on a selective basis. We also wrote an open letter to the Big 4 firms, which was published in the Accountant and remains unanswered. An excerpt from the report advises:
“All of the key factors that led to Enron, and the downfall of Arthur Andersen, are still with us today (poor governance, skewed value motives of partners, avarice, ineffective governmental and regulatory control, obsolete accounting and auditing practice). Bringing the sector back into line requires re-visiting the Andersen option of revoking one of the key player’s licence. By rating the sector on the OMINDEX scale, and the client organizations being audited, MI can identify both the worst candidates for the most serious sanction and the best who can become the sector’s exemplar of the best behaviour and the highest value. MI’s initial, baseline OMRs (shown in the ‘OMINDEX BIG 4’ table above) identify KPMG as bottom of this cozy, closely-knit pack. This signifies no clear water in performance or culture between them. All should be required to demonstrate their commitment to continuous, whole system, improvement by signing up to the MI professional standard, asking themselves the questions on our OM30 (see appendix) and reporting accordingly; as part of their own journey towards the highest levels of maturity and societal legitimacy.”