Business & Investing
Sponsored by

PwC in trouble?

9,286 Views | 71 Replies | Last: 7 yr ago by FrioAg 00
Ag13
How long do you want to ignore this user?
AG
http://www.marketwatch.com/story/pwc-faces-three-major-trials-that-could-put-firm-out-of-business-2016-08-12?link=sfmw_fb

So maybe giving fresh college grads the responsibility of auditing isn't a great business model after all.
Zemira
How long do you want to ignore this user?
AG
I kinda hope the Big 4 all fail.
IrishTxAggie
How long do you want to ignore this user?
AG
You have any idea of how many people work for the big 4? Including 100s if not thousands of Aggies between the 4.

But you're right. Let's hope that the 5th largest privately held company in the US fails...
Old Buffalo
How long do you want to ignore this user?
AG
quote:
You have any idea of how many people work for the big 4? Including 100s if not thousands of Aggies between the 4.

But you're right. Let's hope that the 5th largest privately held company in the US fails...


Have you ever heard of Arthur Andersen?

Do you know where those people are now? With other accounting firms.

It doesn't matter if there's the Big 5 or Big 3, the demand isn't going to change.
Zemira
How long do you want to ignore this user?
AG
quote:
You have any idea of how many people work for the big 4? Including 100s if not thousands of Aggies between the 4.

But you're right. Let's hope that the 5th largest privately held company in the US fails...


Yes I realize thousands of Aggies are employed by the Big 4.

Thousands of Aggies were employed by Enron and Arthur Anderson.

If there is a problem with a company or companies it is better to pull of the bandaid then to keep patching them up.

I also think the auto industry and banks should have been allowed to fail and not bailed out with taxpayer dollars.

The government is $19 Trillion in debt. There is no logical way the debt is going to be paid off ever. The number just keeps growing.

In these situations eventually you have to let them go bankrupt and they can be reborn from the ashes.

If accounting firms are not reliable they should be held accountable. If there is nothing wrong then they shouldn't be worried about the lawsuits.
Duncan Idaho
How long do you want to ignore this user?
This will be facilitating to watch. Especially considering who is suing them in the Florida case.

libertyag
How long do you want to ignore this user?
AG
quote:

Have you ever heard of Arthur Andersen?

Do you know where those people are now? With other accounting firms.



Even those who had retired?
IrishTxAggie
How long do you want to ignore this user?
AG
I'm not saying they shouldn't be allowed to fail. I think the auto bailout was BS. But to actively hope they do is kind of ****ty... Especially coming from someone that works in the energy industry. Thats 200K+ jobs at PwC.
Zemira
How long do you want to ignore this user?
AG
The last thing I want is people to loose their jobs.

But PWC US has three fairly serious lawsuits going to trial. From the article any judgement of size would probably bankrupt PWC US. This would probably send the remaining 3 into a tailspin.

So if they did participate in fraud I hope they fail.

If they didn't they should survive just fine.
Aggie1806
How long do you want to ignore this user?
AG
You have absolutely no clue what the hell you're talking about.
Buck Compton
How long do you want to ignore this user?
AG
quote:
The last thing I want is people to loose their jobs.

But PWC US has three fairly serious lawsuits going to trial. From the article any judgement of size would probably bankrupt PWC US. This would probably send the remaining 3 into a tailspin.

So if they did participate in fraud I hope they fail.

If they didn't they should survive just fine.
So your argument is that the other three would be sent into a tailspin? But earlier argued that there will always be a Big X and demand will be there.

I don't buy the first premise anyway, as one, arguably two, of the Big 4 have been quite successful at diversifying their operations away from Audit practices.
26.2
How long do you want to ignore this user?
lose
Duncan Idaho
How long do you want to ignore this user?
To be fair, it isn't the staff auditors that are the problem. Their work is signed off by so many people, I can't blame them.

Now the managers trying to get a good feedback score or the partner trying to keep the client...I've seen them rationalize some insane *****
Duncan Idaho
How long do you want to ignore this user?
Well they settled.

http://www.wsj.com/articles/pricewaterhousecoopers-settles-5-5-billion-crisis-era-lawsuit-1472226383
combat wombat™
How long do you want to ignore this user?
AG
I've always thought that putting "dumb" (inexperienced) kids fresh out of college in charge of the lowest level of work, where you are most likely to spot problems, was counter-intuitive. They might notice something doesn't seem kosher, but the company's representative can snow them with little effort.
jpc08
How long do you want to ignore this user?
AG
quote:
Well they settled.

http://www.wsj.com/articles/pricewaterhousecoopers-settles-5-5-billion-crisis-era-lawsuit-1472226383
Why does their logo look like a 13 year old wrote it? PriceWaTeRHousECoopers
Squirrel Master
How long do you want to ignore this user?
AG
quote:
I've always thought that putting "dumb" (inexperienced) kids fresh out of college in charge of the lowest level of work, where you are most likely to spot problems, was counter-intuitive. They might notice something doesn't seem kosher, but the company's representative can snow them with little effort.
The low level stuff that inexperienced auditors review is not where you are most likely to find meaningful errors, and regardless, an appropriate review by more experienced people should detect if something is amiss that the inexperienced auditor just tries to rationalize away based on some explanation from the client.
ItsA&InotA&M
How long do you want to ignore this user?
quote:
The last thing I want is people to loose their jobs.

But PWC US has three fairly serious lawsuits going to trial. From the article any judgement of size would probably bankrupt PWC US. This would probably send the remaining 3 into a tailspin.

So if they did participate in fraud I hope they fail.

If they didn't they should survive just fine.
Which of the Big 4 (or Big 5) did you work prior to going to industry?
combat wombat™
How long do you want to ignore this user?
AG
quote:
quote:
I've always thought that putting "dumb" (inexperienced) kids fresh out of college in charge of the lowest level of work, where you are most likely to spot problems, was counter-intuitive. They might notice something doesn't seem kosher, but the company's representative can snow them with little effort.
The low level stuff that inexperienced auditors review is not where you are most likely to find meaningful errors, and regardless, an appropriate review by more experienced people should detect if something is amiss that the inexperienced auditor just tries to rationalize away based on some explanation from the client.
I remember being VERY green on an audit my first year at a big 6 (that's what it was them) firm. O&G client had just changes systems and they were unable to reproduce certain reports from the previous year. My marching orders had been to "just do what we did last year". (At that time, I was following procedures without any understanding of the purpose of those procedures.)

So, I met with the in-charge and asked them what our end-goal was so that I could figure out what to do, since "doing what we did last year" was not an option. You know what I was told REPEATEDLY? Do what we did last year. That was the answer.

So, there is no way the in-charge was able to effectively review my work since it's evident they didn't know what they were doing. I can tell you that this was not an isolated event in the industry.
Old Buffalo
How long do you want to ignore this user?
AG
Agree 100%. The problem with audit is that firms try to pack too much into a small window. This means that employees can either do detailed work and stay extremely late (2am - 18 hour day), or just copy last year mindlessly and leave earlier (10pm - 14 hour day). After 2 weeks, you're going to choose the easier path just to have a life.

It's no more apparent than a first year audit when there are no work papers to copy. Can't tell you how many times I've heard new jobs asking for files of a similar type company, just to copy work papers. The staff can't think for themselves to create a work paper from scratch .
Sooner Born
How long do you want to ignore this user?
I don't think it's that they can't think for themselves...they are just under pressure to keep their realization rates up on under budgeted projects.
combat wombat™
How long do you want to ignore this user?
AG
quote:
I don't think it's that they can't think for themselves...they are just under pressure to keep their realization rates up on under budgeted projects.
It's a bit of both. Brand new staff just haven't figured it out yet. This isn't a matter of intelligence... it's a matter of understanding the goals and process. That just comes with experience.
Duncan Idaho
How long do you want to ignore this user?
quote:
I don't think it's that they can't think for themselves...they are just under pressure to keep their realization rates up on under budgeted projects.


Like others have said it is a bit of both. The kids that go in to accounting aren't the most free thinking of individuals. They have spent the vast majority of thier academic careers doing EXACTLY what they are supposed to do. With few exceptions their classes don't reward, but rather punish creativity.

Squirrel Master
How long do you want to ignore this user?
AG
quote:
I remember being VERY green on an audit my first year at a big 6 (that's what it was them) firm. O&G client had just changes systems and they were unable to reproduce certain reports from the previous year. My marching orders had been to "just do what we did last year". (At that time, I was following procedures without any understanding of the purpose of those procedures.)

So, I met with the in-charge and asked them what our end-goal was so that I could figure out what to do, since "doing what we did last year" was not an option. You know what I was told REPEATEDLY? Do what we did last year. That was the answer.

So, there is no way the in-charge was able to effectively review my work since it's evident they didn't know what they were doing. I can tell you that this was not an isolated event in the industry.
I appreciate that new people just do whats told to them and not every senior is any good at teaching, but still the in-charge isn't the one doing the meaningful review. But I go back to the notion that the work you were doing was also not high-risk work to begin with.
Squirrel Master
How long do you want to ignore this user?
AG
quote:
quote:
I don't think it's that they can't think for themselves...they are just under pressure to keep their realization rates up on under budgeted projects.


Like others have said it is a bit of both. The kids that go in to accounting aren't the most free thinking of individuals. They have spent the vast majority of thier academic careers doing EXACTLY what they are supposed to do. With few exceptions their classes don't reward, but rather punish creativity.


I think this is a very fair statement. To almost everyone, creativity isn't a word you intuitively associate with auditing, but its critical.
Zemira
How long do you want to ignore this user?
AG
quote:
Agree 100%. The problem with audit is that firms try to pack too much into a small window. This means that employees can either do detailed work and stay extremely late (2am - 18 hour day), or just copy last year mindlessly and leave earlier (10pm - 14 hour day). After 2 weeks, you're going to choose the easier path just to have a life.

It's no more apparent than a first year audit when there are no work papers to copy. Can't tell you how many times I've heard new jobs asking for files of a similar type company, just to copy work papers. The staff can't think for themselves to create a work paper from scratch .


And I have lost count of the times I get a dozen questions because this quarter doesn't look like last quarter because something small changed. I finally went overkill a few years ago and told them every likely scenario to keep in their work papers because by golly if it didn't tick and tie the exact same way every quarter we were doing it wrong. The staff and seniors would hound me for additional information and finally I would talk to the audit manager explain when he's like yep that makes sense. Simple things like one quarter you had an accrual and the next we didn't.

I would like to think ours are improving, but I think it's time for them to change again and we get a new set to teach.
Squirrel Master
How long do you want to ignore this user?
AG
quote:
And I have lost count of the times I get a dozen questions because this quarter doesn't look like last quarter because something small changed. I finally went overkill a few years ago and told them every likely scenario to keep in their work papers because by golly if it didn't tick and tie the exact same way every quarter we were doing it wrong. The staff and seniors would hound me for additional information and finally I would talk to the audit manager explain when he's like yep that makes sense. Simple things like one quarter you had an accrual and the next we didn't.
The job of auditors during interim reviews for quarters is to mostly perform inquiries and do comparisons to prior years. Asking you questions about why things changed is specifically the main procedure they are doing. Questions don't mean something is wrong, but without asking the questions, they would have no idea if something was wrong or not. In your example, their job is to understand why you had an accrual last quarter but not this one, etc.
Zemira
How long do you want to ignore this user?
AG
quote:
quote:
And I have lost count of the times I get a dozen questions because this quarter doesn't look like last quarter because something small changed. I finally went overkill a few years ago and told them every likely scenario to keep in their work papers because by golly if it didn't tick and tie the exact same way every quarter we were doing it wrong. The staff and seniors would hound me for additional information and finally I would talk to the audit manager explain when he's like yep that makes sense. Simple things like one quarter you had an accrual and the next we didn't.
The job of auditors during interim reviews for quarters is to mostly perform inquiries and do comparisons to prior years. Asking you questions about why things changed is specifically the main procedure they are doing. Questions don't mean something is wrong, but without asking the questions, they would have no idea if something was wrong or not. In your example, their job is to understand why you had an accrual last quarter but not this one, etc.


I understand they are there to ask questions, especially on why something changed; those are the questions they are supposed to ask me.

The problem I have run into is they repeatedly ask for the same thing 3 times and 5 different ways. They think they are missing a PBC or a schedule; when what I sent just looks slightly different. I know they are trying to determine why it changed or why it is different, but they would never just ask why. They just assume that because it is not an exact copy of what they received previously it is the wrong thing.

So the latest bunch I make sure I sit down face to face and ask me questions. Which works a 100 times better than the group from 2 years ago.
Old Buffalo
How long do you want to ignore this user?
AG
What Zemira is saying is that so many of the younger staff are trying to check a box and not thinking about a business in general.

Giving a new staff a PBC that has sales (or what ever key data needed) in a different column or sorted by zip code versus store, throws them off because its not an exact replica that was filed away in the prior year. The majority of the younger staff can't decipher that all necessary information is there, you just have to analyze a different way.

Duncan Idaho
How long do you want to ignore this user?
quote:

I think this is a very fair statement. To almost everyone, creativity isn't a word you intuitively associate with auditing, but its critical.
It is the difference between the good ones and the bad ones. Which is also why the goods ones usually leave and go into fiance or operations.
Sooner Born
How long do you want to ignore this user?
And the bad ones make partner.
SlackerAg
How long do you want to ignore this user?
AG
Lybrand lucked out on this one.
Squirrel Master
How long do you want to ignore this user?
AG
quote:
quote:
quote:
And I have lost count of the times I get a dozen questions because this quarter doesn't look like last quarter because something small changed. I finally went overkill a few years ago and told them every likely scenario to keep in their work papers because by golly if it didn't tick and tie the exact same way every quarter we were doing it wrong. The staff and seniors would hound me for additional information and finally I would talk to the audit manager explain when he's like yep that makes sense. Simple things like one quarter you had an accrual and the next we didn't.
The job of auditors during interim reviews for quarters is to mostly perform inquiries and do comparisons to prior years. Asking you questions about why things changed is specifically the main procedure they are doing. Questions don't mean something is wrong, but without asking the questions, they would have no idea if something was wrong or not. In your example, their job is to understand why you had an accrual last quarter but not this one, etc.

The problem I have run into is they repeatedly ask for the same thing 3 times and 5 different ways. They think they are missing a PBC or a schedule; when what I sent just looks slightly different. I know they are trying to determine why it changed or why it is different, but they would never just ask why. They just assume that because it is not an exact copy of what they received previously it is the wrong thing.


Ok, I'm totally with you on this. That's just people who lack the ability to use context to analyze what they are looking at.
smokeythebear
How long do you want to ignore this user?
AG
Still, I don't think it is beneficial to the business sector to have one of the Big 4 go under. If major fraud goes undetected for a number of years, then certainly people should pay the price with their jobs. But bankrupting the entire firm just punishes the other tens of thousands of honest employees across the globe. Also it just further consolidates the audit world into the Big 3 and perpetuates the issue of "too big to fail".

I didn't work at PWC, but I knew a lot of really good, smart, Aggies who did/do and I can't imagine blaming them for the above lawsuits.
Squirrel Master
How long do you want to ignore this user?
AG
I don't care about employees as anyone who works there would find other work.

But I agree its not good if one were to go under (which isn't really at risk of happening, despite the headline). As it is, because of how much consulting and valuation work is out there with major companies, there is typically only one or two firms who could even audit the largest companies, due to independence rules. By removing one more of the four, it would squeeze the market more and remove some competition for the different lines of work. Unless Grant Thornton is ready to really step up to the big boys table, but they're way behind the big 4 and it would take a decade for them to really fill any gap made if one fell out.
Last Page
Page 1 of 3
 
×
subscribe Verify your student status
See Subscription Benefits
Trial only available to users who have never subscribed or participated in a previous trial.