It is rare that I get highly emotional about things that are written by others but stuff I’ve seen written about the Satyam debacle and PwC’s involvement on AccountancyAge and The Guardian is at best apologetic and at worst a disgrace to the idea of objective writing.
This may be a rare sport but the fact PWC is/was heavily implicated in Satyam’s demise is not just a matter of concern to investors but to the profession as a whole. As anyone who has read my blog knows, that matters deeply to me. The Big Four muffs it, everyone gets the back wash. Hence the flip flop ‘did they/didn’t they’ know about the myriad of compromising positions PwC seems to find itself in are matters of deep public concern as well. Let me paraphrase:
Satyam was a fraud:
Here’s the bottom line on this mess. If PWC’s Indian ‘associates’ were involved with consulting arrangements then PWC should have recused itself from any audit activity
Let’s give them a break and assume they were free and clear. How the heck did the audit partners manage to miss $1 bn (roughly) cash that Satyam’s CEO admits went missing? The answer is a simple fraud I learned about the first six months I was training. Rule no.1: seek independent proof of cash balances. So if PWC…errr…Lovelock & Lewes…err who the heck? missed that then they were either monumentally stupid (ergo fiscally liable) or…I don’t know what.
Here’s the elephant in the room: PCAOB reviewed PWC India in 2008 and has as yet to report to the great unwashed – ergo you and me. If they missed this simple trick of putting another firm in the driving seat then what do they say? Are they that stupid? Did they know and ignore? These are important and as yet unanswered questions.
When you stand back from this mess and try not to take the comedic line, PWC has royally messed up. It’s in breach of SEC rules, it’s possibly in breach of contract terms following its consulting divestiture and yet still tries to say: ‘We’re innocent.’ When this crap hit the fan, any sane company management would have parachuted armies of people into India to clear out the dead wood, smarten the business up and demonstrate that it takes these things seriously. Instead, PWC uses its PR machine to spin contradictory stories that confuse and obfuscate reality while all the time schmoozing what must be (my armchair interpretation) corrupt or dopey politicians. So where does AA and The Guardian fit into this?
They have no subject matter experts who have the first idea about the issues involved. Instead, they suck up the PR crap and make it fit into an apologetic yet inaccurate account of reality and expect their readers to shrug and say so what. That despite the fact I know they have spoken to the one person who has dug deep into this morass. They believe – erroneously – that their brand presence gives them the kudos to get away with this kind of shoddy work. They are wrong. Examples: from AccountancyAge:
The subsidiary was attached to the old Coopers & Lybrand network, with whom PwC merged in 1998. PwC passed on the Satyam job because it is not allowed to carry out audits using its international brand name under Indian law.
No, no and no. That’s PWC PR BS. PWC India is on record to say that it couldn’t cope with the audit – so…to put it bluntly..who is lying? And why didn’t AA ask the obvious questions? But no – they’re too stupid, lazy or ignorant. That’s a great pity because I know a number of the senior AA reporting staff who in times past did a phenomenal job of revealing issues – sometimes to the point of going to court to defend their position. Damien Wild – what they heck are you doing that your staff can get away with this tripe?
The subsidiary was part of the old Coopers & Lybrand network swallowed up by PWC. Its role may have contributed to confusion over whether PWC was responsible for signing off the accounts.
Puhlease – does anyone think that right minded people are that easily duped let alone the so called partners of a Big Four outfit? But it gets worse:
The accountant’s London office said it deployed Lovelock & Lewes because, under a quirk of Indian law, audit firms cannot employ more than 20 people and are not allowed to use their international brand name for audits.
Ahem – this is a so called global business that also claims each firm is independent of others. It’s a widely repeated mantra. I don’t know any other business that could successfully pull that charade off unless it admitted – we’re a franchise and be done with the brand pretense. Even so, it seems The Guardian has sucked that up, no questions asked. Charles Arthur – I’ve written for you and you’ve made me work for my coin. Quite rightly and for which I thank you. Do different standards apply to dopey staffers?
But here is the real disgrace. If you walk through the stories and ask – where are they getting this information from, you can only come to one conclusion – my good friend Francine McKenna – who doesn’t get the courtesy of a mention let alone attribution for what she freely gave these morons who have sucked up the PwC BS and spat it out for you and I to accept. This is a gross travesty for which both publications should be thoroughly ashamed. I recall many years ago, a smart editor told me: “If you don’t understand then ask why?” Have these idiots been taught that basic MO?
To add insult to injury, The Guardian has not bothered to fact check a single statement it makes. Example:
PWC says this was the only contract on which they both worked and that they were hired independently by the client, Idearc.
This is horse crap of the two storey variety. If they’d spoken with Francine at length, talked to industry analysts and did any poking around at all then they’d soon discover this is hokem.
To make matters worse still, The Guardian fails to recognize the obvious disconnect between PwC’s declared position as a network and the so called authoritative words coming out of some London based PR wonk. As I and others have said before – you can’t have it both ways and expect to be taken seriously. Not in my world.
Yes I am angry. Can you understand why? The profession is in terrible shape. People I speak with are losing trust. Despite its best intentions, ICAEW does almost nothing to whip the Big Four into line – why? It’s dependent on their recruitment drives to keep the whole sorry ship going along. In the meantime, the smaller firms do their best (by and large) to help clients with little reward. Is it any wonder that small practice members struggle to trust the very institution they signed up for? On my side of the fence, I make no apologies for tearing mainstream media a new arsehole. Enough is enough.
