September 28, 2012
STOP PRESS! An Auditor has been brought to task for a failed bank!
In what is stunning news - because we never believed it would happen - it transpires that, as reported by The Economist:
In 2002 the Sarbanes-Oxley act limited what kind of non-audit services an American accounting firm can offer to an audit client. But contrary to what many people believe, it did not forbid all of them. In its last full proxy statement before being bought by JPMorgan, Bear Stearns reported paying Deloitte in 2006 not only $20.8m for audit, but $6.3m for other services. The perception that auditors and clients are hand-in-glove, fair or not, is a reason why shareholders of Bear Stearns sued Deloitte along with the defunct bank. (JPMorgan and Deloitte settled in June. Deloitte paid out $20m, denying any wrongdoing.)
So, when anybody ever asks "did any auditor get taken to task over a failed bank?" the answer is YES. In the global financial crisis, Mark 1, which cost the world a trillion or two, we can now authoritively state that Deloitte paid out $20m and denied any wrongdoing.
In related news, the same article reports:
IT IS hardly news that the “Big Four” accounting firms get bigger nearly every year. But where they are growing says a lot about how they will look like in a decade, and the prospects worry some regulators and lawmakers. On September 19th Deloitte Touche Tohmatsu was the first to report revenues for its 2012 fiscal year, crowing of 8.6% growth, to $31.3 billion. Ernst & Young, PwC and KPMG will soon report their revenues (as private firms the Big Four choose not to report profits).
OK, does anyone know what the margin on audit & consulting is typically thought to be?