Unregistered
Back in the 1980s, I briefly worked as a auditor for Coopers and Lybrand, (then a "Big Eight" accounting firm) which later became a part of PriceWaterhouseCoopers. Today, I am an individual investor and one of many who has taken a few lumps from Enron.
The Enron debacle confirms an opinion I have held about the large accounting firms for years, which I would now like to share for whatever it may be worth to those who may be similarly situated. Specifically:
1. The large accounting firms are mostly whores and will do anything to keep the fees rolling in, so don't expect a Big Five auditor to stand up to a large corporate client on matters of principle. The large corporate client will almost always ultimately have its way. Conclusion: As for protecting the interests of public investors, the opinion of a Big Five Auditor is not worth a damn.
2. That under the present arrangemant, there is an obvious built-in conflict of interest between the Big Five auditor and the large corporate client; in other words, the auditors' "independence" is mostly an illusion. Worse, the politicians and lawmakers (as a group) have also been constructively "bought off" since they seem patently incapable of enacting any meaningful reform. And this is not a new problem; it has been kicked around for years with no real change.
3. If you are an individual investor, don't kid yourself into thinking that you can somehow compensate for these things by doing more personal "due diligence" before investing. You will just get laughed out of town if you contact a large corporate client and start asking questions about any area of their finances that is sensitive. At best, you will be dazzled with b.s. and made to feel like an idiot; at worst you will be outright lied to or given a line about how they are not "at liberty" to discuss whatever.
Caveat emptor!
The Enron debacle confirms an opinion I have held about the large accounting firms for years, which I would now like to share for whatever it may be worth to those who may be similarly situated. Specifically:
1. The large accounting firms are mostly whores and will do anything to keep the fees rolling in, so don't expect a Big Five auditor to stand up to a large corporate client on matters of principle. The large corporate client will almost always ultimately have its way. Conclusion: As for protecting the interests of public investors, the opinion of a Big Five Auditor is not worth a damn.
2. That under the present arrangemant, there is an obvious built-in conflict of interest between the Big Five auditor and the large corporate client; in other words, the auditors' "independence" is mostly an illusion. Worse, the politicians and lawmakers (as a group) have also been constructively "bought off" since they seem patently incapable of enacting any meaningful reform. And this is not a new problem; it has been kicked around for years with no real change.
3. If you are an individual investor, don't kid yourself into thinking that you can somehow compensate for these things by doing more personal "due diligence" before investing. You will just get laughed out of town if you contact a large corporate client and start asking questions about any area of their finances that is sensitive. At best, you will be dazzled with b.s. and made to feel like an idiot; at worst you will be outright lied to or given a line about how they are not "at liberty" to discuss whatever.
Caveat emptor!