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Accountant Liability. The D & O diary


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External accountant, specially the Big 4s, and their performance and liability around the long list of financial scandals and corporate fraud the last decade.

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Accountant Liability. The D & O diary

  1. 1. Accountant Liability : The D & O Diary Kevin M. LaCroix is an attorney and Executive Vice President, OakBridge Insurance Services, Beachwood,Ohio, a division of R- Home > Accountant Liability > T Specialty, LLC. OakBridge is an insurance intermediary focused exclusively on management Audit Firms Litigation Woes Mount, Report Shows liability issues. MORE... Posted on July 23, 2009 by Kevin LaCroix About As reflected in a recently released and detailed analysis of audit firms’ current litigation Services and prior lawsuit settlements, the audit firs’ litigation challenges are a serious and Contact growing problem. The July 2009 presentation by Mark Cheffers, the CEO of Audit Analytics, is entitled "Accounting Professional Liability: Scorecards and Commentary" Archives and can be found here. According to a July 22, 2009 Compliance Week article (here), Cheffers presented the slides at a recent litigation conference cosponsored by the American Bar Association and the American Law Institute. The presentation materials reflect very detailed information about the major accounting firms’ litigation. Among other things, the presentation aggregates the top 50 accounting malpractice settlements since 1999. The data show that Ernst & Young has paid the largest amount in malpractice settlements during that period, totaling $1.92 billion. KPMG follows with settlements totaling $1.42 billion, followed by PricewaterhouseCoopers at $1.27 billion and Delotte & Touche at $1.25 billion. As detailed in the presentation, the audit firms now face huge potential exposure from the growing numbers of lawsuits that have been filed against them in connection with the credit crisis and the Madoff scandal. Cheffers’ presentation lists the current litigation scorecard of cases that have been filed against the audit firms. According to the Compliance Week article, Cheffers said at the conference that these lawsuits filed so far are "likely just the beginning." The presentation also shows the prevalence of going concern audit opinions, both in terms of percentage of all audit opinions and in absolute numerical terms. The presentation shows that in 2008 going concern opinions, both in percentage terms and in absolute numbers were at their highest level in the past decade There may well be other places where this kind of information about audit firm liability exposure has previously been compiled, but this is the first time I have seen the information presented this comprehensively. The information presented in the slides is fascinating and one can only hope that Cheffers will continue to update the information and continue to make it publicly available. TAGS: Accountant Liability Comments (1) Trackbacks (1) Share Link KPMG Settles Options Backdating Gatekeeper Claim for $22.5 Million Posted on June 16, 2009 by Kevin LaCroix Enter keywords: In the latest twist in the long-running options backdating saga, and in what appears to be a significant milestone in the options backdating-related gatekeeper claims, on June 15, 2009, Vitesse Semiconductor announced (here) that it had reached a[17-06-2011 22:03:15]
  2. 2. Accountant Liability : The D & O Diary settlement with its former auditor, KPMG LLP, in connection with the option backdating related allegations. In the settlement KPMG agreed to pay $22.5 million Add this blog to your feeds or and to forgive past indebtedness. subscribe by email MORE... Enter email address As discussed at greater length here, in June 2007,Vitesse sued KPMG in Los Angeles County Superior Court alleging that KPMG had been negligent in auditing the company’s stock option grants and financial statements during the years 1994 to 2000. Vitesse later amended the complaint to include the years 2001 to 2004. Vitesse itself had been the subject of an options backdating-related securities class action lawsuit in the Central This multipart series explores the basics of directors and officers District of California, as described here. Vitesse settled that lawsuit for a payment $10.2 million in cash, $8.75 liability insurance. The index for million of which came from the company’s D&O insurance carrier, and the balance in payments from individual this series can be found here. defendants. The settlement also included the transfer of shares of Vitesse stock from Vitesse and from the individual defendants. AIM The plaintiffs in the options backdating securities lawsuit had also sued KPMG and as reflected here, on June Accountant Liability 16, 2008, the parties to the securities lawsuit filed a stipulation of settlement in which KPMG agreed to contribute $7.750 million toward the class settlement. Blogging Class Action Settlements KPMG’s recent $22.5 million settlement of Vitesse’s own lawsuit is in addition to KPMG’s separate $7.750 Corporate Governance million contribution to the settlement of the securities class action lawsuit. D & O Insurance ERISA As I recently noted (here), the options backdating securities class action lawsuits themselves appear to be Earnings Guidance winding down, but until word circulated of KPMG’s settlement with Vitesse, I had not heard of the resolution of Enron any cases that companies themselves had filed against their outside professional advisors. Environmental Liability Executive Compensation Even if there were prior outside gatekeeper settlements that I missed, the KPMG settlement with Vitesse has to be the most significant settlement between an outside gatekeeper and a company with respect to the options Failed Banks backdating scandal. It will be interesting to see whether the final stage of the options backdating saga includes Fair Labor Standards Act further significant gatekeeper claim resolutions. Given the magnitude of the KPMG settlement, it would Foreign Corrupt Practices Act certainly seem that there could be other significant settlements and perhaps even the assertion of additional Hedge Funds claims. IPO Laddering Cases IPOs I would be very interested to know if readers are aware of the resolution of any other cases that companies have filed against their outside professionals in connection with the options backdating scandal. Insider Trading International D & O As noted here, KPMG is also the subject of a trustee’s claim in connection with the New Century Financial Corp. Madoff Litigation bankruptcy proceeding. KPMG also remains a defendant in the New Century subprime-related securities class McNulty Memo action lawsuit, after its motion to dismiss in that case was denied, as discussed here. Opt-Outs Options Backdating How Will GM Sell Cars Now?: General Motors certainly faces a daunting challenge trying to sell cars as a Outside Director Liability bankrupt company. I have posted a video link below of an irreverent but particularly funny take on what a bankrupt GM’s ads might look like. The spoof ad does a great job ripping conventional car ad clichés, which PCAOB clearly won’t work now (if they ever did). PIPEs Financing Hat tip to the Planet Money blog for the link to the video. Warning, the ad contains language some might Patriot Act consider offensive. Paulson Committee Plaintiffs Bar Private Equity Proxy Statements Regulatory Reform SOX (Generally) SOX Whistleblower Securities Litigation Share Buybacks[17-06-2011 22:03:15]
  3. 3. Accountant Liability : The D & O Diary Shareholders Derivative Litigation Subprime Litigation Thompson Memo Videos Warren Buffett TAGS: Accountant Liability, Options Backdating, accountants liability, gatekeeper liability Archives Comments Trackbacks Share Link All China, All the Time New Century Trustee Sues KPMG; Will Other Gatekeeper Eleventh Circuit Affirms HomeBanc Subprime Securities Claims Follow? Suit Dismissal Supreme Court Holds Fund Posted on April 2, 2009 by Kevin LaCroix Management Company Cannot In a development that may foreshadow further "gatekeeper" claims as part of the Be Held Liable for Funds Statements current credit crisis litigation wave, on April 1, 2009, the trustee for the New Century Financial Corp. liquidation initiated lawsuits in California and New York Should Directors Be Held Liable More Often? against KPMG and its international parent, seeking to recover $1 billion in damages for negligence and for aiding and abetting breaches of fiduciary duty. Predicting the Supreme Courts Decision in Janus Securities Litigation: Variations on The California complaint, filed in the Los Angeles County Superior Court (copy here) against KPMG LLP, alleges a Chinese Theme that the firm "did not act like a watchdog" but rather "acted like a cheerleader for management." Confidential Witness Statements Lead to Dismissal Motion Denial in Regions Financial Subprime The complaint alleges that KPMG "performed grossly negligent audits and reviews" and "failed to detect Securities Lawsuit material errors" with respect to New Century’s residual interest on loans it securitized and on its loan repurchase liability. The complaint also faulted KPMG for its approval of faulty loan loss reserves, alleging that Supreme Court Reverses Fifth Circuit in Halliburton Case; Proof an audit partner silenced the concerns of a more junior audit team member who questioned the reserve of Loss Causation Not Required calculation. At Class Certification Stage D&O Insurance: Does "Fraudulent" Mean "Fraudulent"? The complaint also alleges that KPMG "aided and abetted New Century’s directors’ and officers’ breaches of their fiduciary duties." The complaint alleges that KPMG knew that management was improperly reserving for In a Must-Read Opinion, risks the company faced and that management had failed to implement an effective system of internal controls. Delaware Court Rejects Bid to Block Massey Merger Yet Another Lawsuit Following The aiding and abetting allegations includes the charge that KPMG aided and abetted company officials "in "No" Vote on "Say on Pay" maintaining material weaknesses and significant deficiencies in New Century’s system of internal controls over White Collar Crime-Fighting and financial reporting." The complaint alleges that KPMG is "jointly responsible with the directors and officers for Other Web Notes damages resulting from these breaches." The complaint seeks compensatory damages of $1 billion, as well as punitive damages. Madoff Investor and Feeder Fund Litigation: The List Subprime Lawsuits DIsmissal The complaint filed in the Southern District of New York (copy here) substantially repeats many of the same Motion Grants and Denials allegations as the California complaint, but addresses the alleged liability of KPMG’s international parent. The Counting the Subprime-Related complaint alleges that the parent represented that it would "ensure that member firms’ work would meet Derivative Lawsuits professional standards and regulatory requirements." Counting the Subprime Securities Class Action Lawsuits The complaint alleges that KPMG International did not fulfill these responsibilities, and as a result New Century Options Backdating Settlements, was harmed. The complaint seeks unspecified compensatory as well as punitive damages from KPMG Dismissals and Denials International. Counting the Options Backdating Lawsuits The trustee’s filings in these complaints certainly suggest the possibility that auditors and other "gatekeepers" could be targeted in the wake of the subprime meltdown. Leading accounting indusrty commentator Francine McKenna (also the author of the indispensible "re:The Auditors" blog) is quoted in the April 1, 2009 Wall Street Cyber Inquirer Journal as saying that the case "may embolden others to look more closely at the possibiltiy of bringing Delaware Corporate and [accounting] firms to some level of culpability for the things that happened" that led to the credit crisis. Commercial Litigation Blog Drug and Device Law But in assessing that possibility it may be important to note the particular key circumstances that preceded the III Insurance Industry Blog trustee’s claims against KPMG.Specifically, the new lawsuits follow more than a year after the February 29, PLI Securities Law Practice[17-06-2011 22:03:15]
  4. 4. Accountant Liability : The D & O Diary 2008 581-page report of Michael Missal, the KPMG bankruptcy examiner, in which the examiner concluded that Center KPMG had "contributed" to certain of New Century’s "accounting and reporting deficiencies by enabling them to PLUS Blog persist in, and in some instances, precipitating the Company’s departure from, applicable accounting standards." A detailed review of the examiner’s report, including a link to the report itself, can be found here. Pension Risk Matters SOX First The examiner’s exhaustive review, which among other things specifically suggested the possibility of negligence Securities Docket claims against KPMG, was effectively a road map for the April 1 lawsuits. While the lawsuits might well have Securities Litigation Watch been filed even without the examiner’s report, few other prospective claimants considering "gatekeeper" The 10b-5 Daily litigation will have such a detailed script from which to compose their complaint. The AAO Weblog On the other hand, many of the complaints already filed in numerous lawsuits as part of the current subprime The and credit crisis-related litigation wave have already targeted a variety of gatekeepers, including offering The D&O E&O Monitor underwriters, credit rating agencies, and, in some cases, even the outside auditors. The FCPA Blog The Harvard Law School Indeed, the securities lawsuit filed against New Century’s former directors and officers also specifically named Corporate Governance Blog KPMG as a defendant. In his December 3, 2008 order denying the defendants’ motion to dismiss the securities The Race to the Bottom lawsuit, Central District of California Judge Dean Pregerson specifically denied KPMG’s separate motion to WSJ Law Blog dismiss, finding that the complaint in that case adequately alleged that KPMG was aware of accounting and internal control deficiencies but nevertheless issued its audit opinion in connection with the company’s 2005 White Collar Crime Prof Blog financial statements. A detailed discussion of Judge Pregerson’s decision, including a link to the opinion, can be With Vigour and Zeal found here. re:The Auditors The outcome of KPMG’s dismissal motion in the New Century securities lawsuit, as well as the trustee’s filing of the April 1 lawsuit, among other things suggests that the U.S. Supreme Court’s decision in the Stoneridge case may not deter prospective litigants from pursuing claims against auditors and other gatekeepers. One of the more interesting aspects of the trustee’s complaint against KPMG is his claim seeking to hold the accounting firm "jointly responsible" with New Century’s former directors and officers for the officials’ breaches of their fiduciary duties. While the trustee’s claims at this point represent nothing more than allegations and it remains to be seen whether his claims on this theory will result in any recovery, the possibility that auditors may be alleged to be "jointly liable" for directors’ and officers’ fiduciary breaches raises a host of concerns and questions, not the least of which relate to co-defendant (or third-party defendant) proceedings, such as cross- claims for contribution. All of which leads to a point I have been asserting for some time, which is that we are still only in the earliest stages of the credit crisis related litigation wave. Not only are the cases against the defendant companies continuing to pour in, but the likelihood of further gatekeeper litigation like that filed against KPMG suggests that the litigation will continue for many, many years to come. The "re: The Auditors" blog has an interesting and detailed analysis of the KPMG complaints, here. Hat tip to the Wall Street Journal (here) for copies of the KPMG complaints. Honoring Those Who Serve: A recent MSNBC segment reported on what my good friends, David Bell of AWAC and John McCarrick of the Edwards and Angell law firm, have been doing to honor those who have made the ultimate sacrifice in service to our country. As reflected in the video below, a group they helped to organize, Grateful Nation Montana, is taking steps to ensure that the children of U.S. soldiers killed in the battle will be able to pursue a college education. Please watch this video. It is guaranteed to bring tears to your eyes, but it will also make you appreciate the efforts of a couple of industry leaders, who have done something substantial and worthy to help make a difference.[17-06-2011 22:03:15]
  5. 5. Accountant Liability : The D & O Diary TAGS: Accountant Liability, New Century Financial Corp., Subprime Litigation Comments (3) Trackbacks Share Link So What About Auditor Liability Caps? Posted on April 24, 2008 by Kevin LaCroix One of the recurring suggestions in would-be reformers standard litany of proposed changes for litigation relief is the introduction of auditor liability caps. For example, the Committee on Capital Markets Regulation interim report (about which refer here) proposed the “elimination or reduction of gatekeeper litigation, either through a cap on auditor liability or creation of a safe harbor for certain auditor practices.” Similarly, in early 2007, the European Commission launched a study (about which refer here) on “whether there is a need to reform the rules on auditor liability in the EU.” But while these initiatives are only at the proposal or study phase, the U.K. has moved forward to permit “auditor liability limitation agreements,” under legal provisions that recently went into effect. The newly effective provisions are part of the Companies Act of 2006 (refer here for the Act’s text). The auditor liability limitation provisions are contained in Sections 532 to 538 of the Act, which took effect on April 6, 2008, according to the Act’s implementation timetable (here). For background regarding the Act, refer here. The Act allows auditors to limit their liability by contract, provided that their client’s shareholders approve. Section 534(1) of the Act allows auditors to limit their liability “in respect of any negligence, default, breach of duty or breach of trust, occurring in the course of an audit of accounts.” The limitation cannot cover more than one financial year and it must be approved by a resolution of shareholders. Under Section 537, the liability limitations are not effective except to the extent they are “fair and reasonable” in the particular circumstances. The Act itself does not specify the particular kinds of limitations that are allowable nor does it prescribe the form the limitation is to take. However, a working group of the Financial Reporting Council, the supervisory body for U.K. auditors, has proposed “draft guidance” (here) suggesting ways that the limitation agreement might be framed. The FRC guidance document even includes specimen language to be used as a reference in preparing limitation agreements. The FRC guidance suggests three alternative ways the auditor’s liability might be limited: (a) proportionality, “where the auditor’s liability is limited to his share of the company’s loss, taking into account the liability of others”; (b) fair and reasonable, “where the auditor’s liability is limited to such amount as is fair and reasonable in accordance with Section 537 of the Act”; or (c) monetary cap, “where the auditor’s liability is limited to a particular amount, which is either stated or calculated in some way, e.g.. as a multiple of audit fees.” The Act’s auditor liability limitation provisions represent an interesting experiment, but it will be even more interesting to see how widespread the acceptance of auditor liability limitations agreements becomes. The Act’s requirements themselves may deter widespread adoption, particularly the one-year time limitation and the requirement for shareholder approval. One might also conjecture that there might be some stigma associated with a company’s agreement to limit its auditor’s liability, to the extent the existence of an agreement is interpreted to suggest that the only way the company could procure an auditor’s services was by granting the auditor a liability limitation. There is also legal uncertainty surrounding such issues as the extraterritorial effect of any limitations, which may be of particular concern for auditors of companies that have shareholders, creditors or other business partners outside the U.K. It is probably also relevant that the auditor liability provisions were adopted as part of the Companies Act, which also contains provisions defining directors’ duties and incorporating new statutory procedures for bringing claims against directors. One wonders whether a company’s directors, newly sensitized to their duties and potential litigation risks, will be comfortable relieving their auditors of liability to the company for negligence or other misconduct. Even though the liability limitation has to be approved by shareholders, you can imagine the second-guessing and accusations that might surface if problems do arise later.[17-06-2011 22:03:15]
  6. 6. Accountant Liability : The D & O Diary Within its draft guidance document, the FRC anticipates that companies may well wrestle with the question whether (or even why) they should agree to limit their auditor’s liability, and expressly observes that directors “will wish to establish that it is in the company’s interest to enter into a liability limitation agreement.” The guidance document does not attempt to suggest what interest a company would have in limiting its auditor’s liability. Along with the question of what the take-up of the limitation agreement will be for U.K. companies is the question whether other jurisdictions will adopt the U.K. approach or similar auditor liability limitation provisions. A March 2006 report by Michael Gass and Ashwani Kochlar of Edwards Angell Palmer & Dodge entitled “U.K. Gives Auditor Liability Agreements a Greenlight, But U.S. is Unlikely to Do the Same” (same) takes a look at the new U.K. provisions and considers the possibilities for reform efforts in the U.S. The report concludes that current U.S. reform efforts are “ill-timed” and that given the turmoil in the financial markets, “garnering attention and support to adopt proposals … will be challenging” – unless one of the Big Four accounting firms implodes, in which case “all bets are off.” The Blog also has an interesting post here discussing the newly effective U.K. provisions and expressing skepticism for the likelihood of auditor liability reform in the U.S. anytime soon. Readers interested in the topic of auditor liability caps may want to refer back to my earlier post, here, in which I discuss the very interesting alternative proposal of George Washington University law professor Lawrence Cunningham. Professor Cunningham suggests having the audit firms issue bonds to the capital markets as a way to provide financial protection for their liability risks. U.K. Government to Appeal BAE Systems Ruling: In a recent post (here), I reviewed the April 10, 2008 decision by the U.K.’s High Court of Justice against the British government’s decision to terminate the investigation of alleged bribery involving BAE Systems in connection with a Saudi arms deal. On April 22, 2008, Transparency International, on its own behalf as well as on behalf of several other organizations, wrote (here) to the U.K. Attorney General “urging the government not to appeal the judgment.” The letter stated that “halting the investigation has caused untold damage, both to the reputation of the U.K. and to global efforts to improve governance and combat corruption.” The letter also urged that the action to drop the investigation has “reduced [the U.K.’s] standing among its peers” in the OECD, and any move by the government to appeal “would compound the reputational damage to the U.K.” and would undermine the implementation of the United Nations Convention Against Corruption. Nevertheless, on April 22, 2008, the Serious Fraud Office announced (here) that it will “seek permission to appeal to the House of Lords” against the lower court’s April 10 judgment. The SFO’s announcement quoted the current SFO director as saying that the April 10 judgment “raises principles of general public importance affecting, among other things, the independence of prosecutors and the role of the court in reviewing a prosecutor’s evaluation of the public interest in a case like this.” It is very hard to argue that the U.K.’s efforts to suppress the BAE Systems investigation will not undermine its efforts elsewhere to fight corrupt practices. The unmistakable message is that the U.K. only cares about small scale corruption involving the less powerful, those whom the U.K. feels it can safely push around; but that these impediments can be overcome if the bribe is large enough and the corrupt official powerful enough. Nothing could do more to breed cynicism over anticorruption efforts that for the U.K. government to successfully suppress this investigation. Hat tip to the Sox First blog (here) for the links to the Transparency International and Serious Fraud Office announcements. Time Out for an Idol Thought: I was delighted to learn that my former partner from the Ross, Dixon & Bell law firm, Bill Hopkins, now apparently known by his nom de plume Will Hopkins, is a finalist in the American Idol songwriting competition. The Law Blog has an excellent interview of Bill, er, Will, here. Hopkins, we shall call him, left active law practice to try to write music about the same time I left the law firm to become involved on the business side of insurance. Everyone must follow their own muse, I suppose. Speakers Corner: On Monday April 28, 2008, I will be speaking as a panelist at the C5 Conference on Securities Litigation in London, on a panel entitled "Liability Never Goes Away:Managing Risk and Tackling D&O Liability" The conference features a number of very distinguished speakers. A copy of the seminar materials, including conference agenda, can be found here. If you are attending the conference, I hope you will make it a point to greet me. TAGS: Accountant Liability, Auditor Liability Caps, Companies Act 2006, Limited Liabiltiy Agreements, Litigation Reform Comments Trackbacks Share Link New Century Examiners Report Faults KPMG, Company Officials[17-06-2011 22:03:15]
  7. 7. Accountant Liability : The D & O Diary Posted on March 27, 2008 by Kevin LaCroix In a sweeping 581-page report (here), the examiner appointed in connection with the New Century Financial Corporation bankruptcy found that New Century “engaged in a number of significant improper and imprudent practices related to its loan originations” that “created a ticking time bomb that detonated in 2007.” Bankruptcy examiner Michael J. Missal issued his report as part of the investigation he undertook at the request of New Century’s bankruptcy trustee to examine “any and all accounting and financial statement irregularities, errors and misstatements.” The report is dated February 29, 2008, but it was unsealed on March 26, 2008 at the request of former New Century Employees. The examiner’s report concludes that New Century “had a brazen obsession with increasing loan originations, without due regard to the risks associate with that business strategy.” The report also concludes that New Century “engaged in at least seven wide-ranging accounting practices in 2005 and 2006” that “resulted in material misstatements of the Company’s financial statements.” The examiner did not find sufficient evidence to conclude that New Century engaged in earnings management or manipulation “although its accounting irregularities almost always resulted in increased earnings.” The report also states that New Century’s outside accounting firm, KPMG, “contributed to certain of these accounting and financial reporting deficiencies by enabling them to persist and, in some instances, precipitating the Company’s departure from applicable accounting standards.” The report states that as a result of New Century’s accounting failures New Century understated its repurchase reserve in the third quarter of 2006 by 100%, and reported a quarterly profit of $63.5 million when it should have reported a loss.” In addition, the accounting errors resulted in the payment of performance bonuses to key executives in 2005 “that were at least 300% more than they should have been.” New Century also made “a number of false and misleading statements in its public filings, press releases and other communications.” Based on his investigation, the examiner believes that “several causes of action may be available to the estate.” First, the report concludes that the estate may be able to assert causes of action against KPMG for “professional negligence and negligent misrepresentations.” Second, the estate may be able to assert causes of action against former officers “to recover certain of the bonuses… that were tied, directly or indirectly, to the incorrect financial statements.” These causes of action, the report states, “could seek million of dollars of recoveries.” The examiner also considered whether the company’s former officials breached their fiduciary duties, and whether the estate has possible claims against the officials. The report notes that any assertion of these claims would have “strong defenses to overcome, particularly the business judgment rule and statutory and other limitations.” While the examiner’s conclusions may (and undoubtedly will) be the subject of substantial debate, the report’s analysis of the company’s loan origination practices and accounting shortcomings is remarkably detailed. The sheer sweep and magnitude of the report and the depth of its detail could make New Century the poster child for the excesses of the subprime lending boom, evoking inevitable comparisons with Enron as the byword for an entire era. Indeed, the report suggests a number of echoes from that earlier period, including in particular the accounting firm’s supposed complicity in the company’s alleged excesses. The fallout from the subprime meltdown will continue to accumulate in the months and years to come, but the New Century bankruptcy examiner’s report may represent the first installment on the history of the era. A March 26, 2008 article discussing the examiner’s report can be found here. A March 27, 2008 Wall Street Journal article discussing the report can be found here. TAGS: Accountant Liability, New Century Financial Corp., Subprime Lawsuits, Subprime Litigation, suprime-related litigation Comments (1) Trackbacks (1) Share Link Fraud Detection and the "Expectations Gap" Posted on November 19, 2007 by Kevin LaCroix As a result of the Sarbanes-Oxley Act and other reforms, a variety of structures and procedures were put into place to try to prevent or detect fraud. A number of these reforms involve auditors and the audit profession, in the implicit assumption that auditors have an important role to play in preventing and detecting corporate fraud. But a recent Grant Thornton survey (here) shows that many CFOs still do not feel constrained by their auditors oversight, notwithstanding the reform measures. According to the survey, 62% of the 221 CFOs surveyed believe it would be possible to intentionally misstate their financial statements to their auditors. As one commentator in the November 15, 2007 article (here) commenting on the survey put it, these numbers are "alarming," given that "CFOs - if theyve a mind to -[17-06-2011 22:03:15]
  8. 8. Accountant Liability : The D & O Diary are in a unique position, having the necessary information, intelligence and access to trick auditors in ways that are hard to decipher." Indeed, it is disconcerting that nearly two-thirds of CFOs feel they could fool their auditors on intentionally falsified financial statements. Clearly, if such a large percentage of CFOs feel they could, some of them might, and a few of them will. This intimation of the possibility of undetected fraud should be disconcerting to investors, analysts, and others (including D & O underwriters) who rely on auditors assurance that the financial statements are free from "material misstatement." The disappointment and even anger that investors and others feel when they find they have been misled by falsified financial statements often encompasses a sense of frustration that the auditors failed to detect the fraud. Accordingly, auditors are often named as co-defendants in securities fraud lawsuits, based on a failure to detect the fraud and the auditors statements that there are no material misstatements in the financial statements. But a further Grant Thornton survey finding underscores the theoretical limitations of audit fraud detection. 83 percent of the surveyed CFOs said they did not feel that it was even possible for auditors to detect corporate fraud in all cases. This survey finding embodies the same sentiment expressed in the November 2006 statement of the heads of the six leading accounting firms entitled "Global Capital Markets and the Global Economy: A Vision From the CEOs of the International Audit Networks" (here). The accounting industry leaders noted that "there are limits to what auditors can reasonably uncover, given the limits inherent in todays audits." They go on to note that while there are audit techniques whose principal goals are to "ascertain whether fraud has occurred," these techniques are "not foolproof, nor can they be expected to be." The problem for everyone, both auditors and those who rely in their audits, is that there is, in the words of the industry leaders statement, an "expectations gap." According to the accounting leaders, the gap arises because "many investors, policy makers, and the media believe that the auditors main function is to detect all fraud, and thus, where it materializes and auditors have failed to find it, the auditors are presumed to be at fault." The accounting leaders go on to assert that: Given the inherent limitations of any outside party to discover the presence of fraud, the restrictions governing the methods auditors are allowed to use, and the cost constraints of the audit itself, this presumption is not aligned with the current auditing standards. The accounting leaders frustration is palpable; they apparently recognize, as do the CFOs that responded to the Grant Thornton survey, that management bent on misrepresenting their companys financial condition can conceal the misrepresentations from the auditors. But the reason there is nonetheless an expectations gap is that investors and others do rely, as they must, on companys audited financial statements. Merely naming the problem as an expectations gap, or citing the limitations of current auditing standards, does not address the problem, which is that investors and others rely on the audited financial statements in ways the auditors apparently wish they wouldnt or believe they shouldnt. It almost seems as if the auditors message to those who would rely on financial statements is - dont (or, at least, not so much). Given the CFOs and the accounting leaders recognition of the limitations of audit fraud detection, it may be well argued that audited financial statements in fact should not be relied upon. But what alternative do investors have? The investors necessarily place some value on the fact that professionals independent of management have examined the financial statements. It is nevertheless a significant concern that nearly two-thirds of CFOs believe they can fool their auditors. And apparently the auditors agree with the general proposition as well. This ought to make anyone who needs must rely on audited financial statements very uneasy. Special thanks to John Condon at Audit Integrity for the link to the survey results and the article. A Service Error Apology: I am sorry that early in the evening on November 19, 2007, my syndication service spontaneously generated an erroneous email with the cryptic message "Forbidden 403." (For those, like me, who have to know, Error 403 messages are explained --sort of -- here.) I do not know why this error message was sent. I apologize to all of my readers for the unsolicited distribution email. I am attempting to ensure that this error will not recur. TAGS: Accountant Liability Comments Trackbacks Share Link An Alternative to Auditor Liability Caps?[17-06-2011 22:03:15]
  9. 9. Accountant Liability : The D & O Diary Posted on September 11, 2007 by Kevin LaCroix As the various blue-ribbon panels studying the competitiveness of the U.S. financial markets have proposed various regulatory reforms, one recurring theme has been the proposal for auditor liability caps (refer here), a topic that is also under study by the European Commission (refer here). A 2007 paper by Professor Lawrence Cunningham of the George Washington University Law School entitled "Securitizing Audit Failure Risk: An Alternative to Caps on Damages" (here) proposes an alternative to auditor liability caps for the risk of catastrophic audit failure, by having the audit firms issue bonds to the capital markets to provide coverage for the risks. Cunningham notes that at the center of the arguments in support of auditor liability caps are concerns about the limited availability of insurance for auditors; while these arguments are most persuasive during hard insurance markets when insurance is relatively unavailable, the arguments may be less persuasive during soft insurance markets when insurance is relatively more available. Cunningham notes that "proposals to cap liability that are supported by arguments about lack of insurance may be unable to respond to the dynamics of these markets." The likelihood of a legislative liability cap solution that is appropriately sensitive to these changing insurance marketplace dynamics is unlikely. But in any event, the periodic fluctuations of the insurance market clearly present limitations on the value of insurance-based risk transfer mechanism; Cunninghams article reviews those limitations at length. As an alternative to the insurance-based model, Cunningham proposes "insurance-based securitization" that would "distribute risk of audit failure through the capital markets." Cunninghams proposal is modeled in the existing use of catastrophe bonds (or cat bonds as they are more commonly known) to transfer risk for extreme property loss or damage events. These bonds pool investor funds, which are invested in low-risk investment vehicles and pay out interest income, with the principal available to pay loss in the event of the occurrence of certain defined events. Cunningham proposes that just as these bonds are available to protect against the risk of natural events such as earthquakes and hurricanes, similar types of bonds could also be used to protect against the risk of catastrophic audit failure. Cunningham advances a number of arguments in support of his proposal. Among other things, he argues that managing these risks through the capital markets "should reduce the volatility that auditors have faced for decades and that is an important basis for the insurance based arguments in favor of establishing ex ante damage caps on auditor liability for auditor failures." Cunningham also argues that, through risk-sensitive interest rate requirements, capital markets will introduce "capital market monitoring of auditing firm performance." Finally, Cunningham notes that a private bond offering "is relatively simple for auditing firms to complete compared to the political challenge establish caps on damages." Cunninghams innovative proposal is both novel and interesting. The general success of the existing cat bond market does suggest the innovative potential of this proposal. I do have several concerns about the proposal though, which are as follows. In general, the cat bond market has extended only to first-party property damage risk, not to third-party liability risk. I am guessing there are several reasons for this. The first is that the triggering event for a property cat bond is easily identifiable, and the losses are short-tail - that is, the event occurs and the losses are ascertained within a relatively short time thereafter. In contrast, a third-party liability claim can have a very protracted life with an uncertain outcome. The extent and duration of this uncertainty may be ill-suited to the requirements of the capital markets and of investors; the claims uncertainty could undermine reliable bond valuations during the long duration of the claim. In addition, the losses that trigger cat bond payments are beyond anyones control; the mere existence of the bonds do not and cannot attract claims. By contrast, the actions of third parties can cause events that would trigger liability bond losses, and indeed the very existence of the bonds arguably could attract claims (consistent with the old insurance adage that limits attract losses). Along the same lines, the existing cat bond market is supported by a very sophisticated cat modeling industry that produces robust, scientific frequency predictions concerning the likelihood of one of the triggering natural events. As someone who as spent a lifetime pondering liability claim frequency and severity, I know that projecting either liability frequency or severity are very difficult and uncertain enterprises. It would be a very difficult task indeed to compose the kind of disclosure that would be required to provide investors with the kind of projections these bonds would require in order to support a robust marketplace. This difficulty could require interest rate payments on the bonds that could make the bonds uneconomical for the marketplace. (This same principle is at work in insurance pricing, where the loss ratio insurers use as a pricing input is usually more demanding than for property lines, leading to higher pricing requirments to account for the uncertainty.) In addition, the big four accounting firms operate as private entities. Their history and their clients[17-06-2011 22:03:15]
  10. 10. Accountant Liability : The D & O Diary expectations could both militate against their voluntarily undertaking the kind of disclosure investors would require. Investors clearly would expect detailed information about the distribution of the firms clientele, and logically could expect disclosures about firm representation of certain specific companies. The level of disclosure the accounting firms would be required to provide investors, even if limited to the context of a private offering and to select investors, could prove to be a difficult if not insurmountable barrier for the accounting firms themselves. Finally, the whole value of a capital market based solution is to avoid the cyclicality and volatility of the insurance marketplace, but the capital markets for these kinds of bonds could be subject to the own cyclicality. Indeed, during a time of significant losses, there may be little or no market interest in bonds of this kind, just as when insurer losses mount insurance can be scarce or unavailable. For that reason, I am uncertain whether the availability of this type of capital market alternative, even if the other barriers could overcome, would in the end remedy the concerns for which an alternative to the traditional insurance marketplace was sought. These concerns notwithstanding, Professor Cunninghams paper is interesting and makes a valuable contribution to the dialog surrounding proposed auditor liability caps. Special thanks to Professor Cunningham for providing me with a link to his article. UPDATE: Professor Cunningham Reponds: Here are Professors Cunninghams responses to my comments about his article: Thanks, Kevin, for your thoughtful comments on my paper exploring adapting cat bonds to auditor liability. Some more background on my motivations before addressing your concerns: 1. Statistical research (here and here) suggests a non-trivial medium-term risk that large liability cases could destroy one of the remaining four big auditing firms and thus threaten our system of private auditing of public enterprises. 2. Reducing this risk by putting legal caps on auditor damages is a hard political sell--Members of Congress find it difficult explaining to American investors why these firms should enjoy such a privilege and any choice of cap levels could seem arbitrary. 3. Proponents of caps currently have incentives, when in doubt, to interpret information in ways that overstate the stakes (as when asserting that the prevalence of self-insurance is due to unavailability of external insurance, a claim I evaluate in the paper). 4. Elsewhere, I endorse Josh Ronens novel idea of financial statement insurance to address some such problems, but recognize that it is also a hard political sell absent a crisis rationalizing the radical change it entails. 5. Here, I consider cat bonds because they: (a) could add resources to meet claims that threaten to destroy audit firms or the industry; (b) avoid political obstacles facing both caps and financial statement insurance; and (c) highlight informational problems in the policy debate on caps. On the substance of your excellent points about cat bonds, particularly how they are used in first-party property damage contexts but not yet for third-party liability contexts: 1. True, property cat bonds address shorter tail losses than third-party claims usually do, raising concerns addressed by contract and pricing. Cat bonds have a set contractual maturity, such as one year or two, and state contractual triggering events that determine whether principal is repaid or lost at maturity (such as judgments or settlements exceeding stated catastrophic amounts during the bond term). So bondholders dont wait until claims are resolved before the payout determination is made. True, a bonds maturity date influences strategic decisions in pending litigation (whether to settle or not and for how much). Contract terms limit this capacity (through tailored rules governing litigation management and general principles like good faith). These contractual features are priced into the bond. 2. Also true, property cat bonds address risks that are purely fortuitous while auditors have some control over exposure, creating the serious problem of moral hazard. But moral hazard exists under existing external insurance and even self-insurance to an extent. Worse, the fact that only four large firms exist can create moral hazard if partners and employees act as if their firms are too big to fail (about which refer to my prior paper, here). So reducing moral hazard seems vital. Financial statement insurance may be better than cat bonds for that purpose but cat bonds contribute bondholders offering market monitoring to diminish the problem not exacerbate it. Also, cat bonds do not attract suits against auditors because they fund only[17-06-2011 22:03:15]
  11. 11. Accountant Liability : The D & O Diary catastrophic loss layers, with negotiated triggers set at upwards of $500 million. 3. True, again, cat bonds for natural disasters are supported by scientific risk modeling tools enabling valid predictions that may not be adaptable to auditing risks. Lacking requisite information could dissuade investors from buying bonds, at least at interest rates less than costs of auditor self-insurance or external insurance. But (a) the statistical research referred to earlier provides a foundation for such exercises and (b) at least some reasonably reliable facsimile of such models seems necessary to justify political decisions to establish caps on auditor liability by legal fiat. 4. Your fourth point seems the most compelling explanation for why auditors have not issued cat bonds and presents the most significant impediment: for understandable reasons, firms dont want to disclose information that investors would require about their client base, financial resources or claims history. Again, however, similar data should be required to justify a political decision to cap liability or set optimal cap levels. On this and the preceding point, it is possible to see informational problems as a sort of market failure supporting regulatory intervention. Yet the information is within firms control and they can decide whether to use it in the political arena, in markets, or not at all. Notably, using this data in the political arena to support caps creates incentives to overstate risk whereas using it in the marketplace to sell cat bonds creates incentives to understate risk. Admittedly, cat bonds may or may not work for auditing. But if they work or might work, this may weaken arguments for caps (and could add protection against audit industry destruction); if they are shown to be unworkable, this may strengthen the case for caps. So either way, I appreciate your giving the idea a public forum for debate (and for your comments that will improve my paper). It would be wonderful if risk modeling firms and investment banks would consider the idea, perhaps even pitch it to auditing firms, for a non- academic test. More About the AIM Challenge: Behind the reform proposals of the blue-ribbon panels mentioned above are concerns about U.S. financial markets loss of IPO market share to overseas securities markets, particularly Londons Alternative Investment Market (AIM) (about which I most recently commented here). But changing marketplace conditions have put the AIM in an altogether different light, as illustrated in the September 10, 2007 article entitled "Londons AIM Exchange Loses Members on Costs as Nasdaq Prospers" (here). According to the article, companies that have listed on AIM are starting to grow disenchanted. 116 companies exited AIM in the first half of 2007, 35 more than a year earlier, and delisting more than doubled to 40 during the same period, compared to 15 last year. (Delistings on Nasdaq meanwhile fell from 41 to 30.) Among other reasons for these departures are high costs and a perceived lack of issuer company benefit - the AIM market is "showing signs of saturation." As one commentator cited in the article noted, while "theres a good market for small caps," the supply of investment has not been able to keep up with the supply of equity. Another commentator cited in the article notes that the increase in companies leaving AIM "is probably a reflection of the market having attracted too many poor quality businesses," as there has been a "deluge of companies that should never have been brought to market." As I have noted before (refer here), the would-be reformers case for regulatory reform has always seemed to be "weak," but as the global marketplace evolves there appear to be increasing reasons to question whether the premise on which the reformers proposals are based even exist. (For further commentary on this same topic, refer here) Subprime Litigation Wave: The D & O Diary has commented frequently (most recently here) on the wave of litigation growing out of the subprime lending mess. The Washington Post has a September 11, 2007 article entitled "Mortgage Mess Unleashes Chain of Lawsuits" (here) which sounds many of the same themes. Among other tidbits in the article is the comment that the SEC has formed a working group to examine "accounting and disclosure issues, as well as stock sales earlier this year by executives at companies that have since been ensnared by the subprime mess." An official at the SEC enforcement division is quoted as saying "we will look at those responsible for any potential fraud, by company management, auditors, lawyers, credit-rating agencies or others." You Cant Make This Stuff Up - But Plaintiffs Lawyers Can!: This article appeared in Crains Chicago Business on September 10, 2007 (here) -- please note that in referring to this article I mean no disrespect to[17-06-2011 22:03:15]
  12. 12. Accountant Liability : The D & O Diary Mrs. Akkad, and I do not in any way mean to make light of her terrible loss. Mrs. Akkad has our deepest sympathies. My inclusion of this article relates particularly to her lawyers comments in the final two paragraphs about her case: The widow of a Hollywood producer who died in a Jordan terrorist bombing is suing hotel chain Global Hyatt Corp. A guest at the Hyatt in Amman, Jordan, Moustapha Akkad was killed Nov. 9, 2005, in an attack by a suicide bomber, according to a statement from law firms representing his widow, Sooha Akkad. The complaint alleges that Chicago-based Hyatt was negligent in failing to responsibly protect its registered guests from foreseeable criminal attacks, failing to provide metal detectors, and failing to keep unauthorized individuals from accessing the inside of the hotel, according to the statement. A spokeswoman for Hyatt declined to comment. Hyatt shouldve had heightened security on the date Mr. Akkad was killed in part due to the date itself, according to the statement. In the Middle East and in many countries, date precedes month when writing out full dates, according to the statement. "Thus, November 9 becomes 9/11," said Thomas Demetrio, a lawyer with Chicago-based law firm Corboy & Demetrio. Special thanks to a loyal reader for proving a link to this article. TAGS: Accountant Liability Comments Trackbacks Share Link The Content and Timing of the PCAOBs Big Four Inspection Reports Posted on January 27, 2007 by Kevin LaCroix The Public Company Accounting Oversight Board (PCAOB) has been the target of extensive criticism for the timing and content (or lack thereof) of the public reports for its inspections of the Big Four accounting Firms. (Prior D & O Diary posts on this issue can be found here and here.) This issue is reviewed at length in a January 26, 2007 article entitled "Why The Big Four Are Still a Mystery" (here), and the article is supplemented by an email interview (here) with PCAOB board member Charles Niemeier. The article reviews the frequent criticisms that the public inspection reports reflect a "lack of context," because the PCAOB does not publicly reveal how many inspections it conducts on each firm. Without this kind of quantitative data, there is no way to assess how widespread the concerns are. The absence of this information means that the inspection process "is not producing the kind of results that it should for people who are using the results and trying to understand what this means," according to the former head of Deloitte, who is now the chair of four public company audit committees, and who is quoted in the article. The delay in reporting the results is also a concern. For example, the reports for the 2005 inspections of Ernst & Young (here) and KPMG (here) were not released until January 2007. The audits inspected were obviously completed substantially before the inspections. The delay gives analysts and others "little leeway in being able to gauge the current performance of an audit firm." Niemeiers response to the concern about the lack of disclosure concerning the number of audits inspected is that it is "not a relevant figure" and "could encourage misleading, superficial comparisons between firms." Niemeier also is opposed to supplying further details about the audit concerns noted in the inspection reports, even information designed to convey how serious the problems noted were; Niemeier feels this would be inconsistent with PCAOBs statutory confidentiality obligations.[17-06-2011 22:03:15]
  13. 13. Accountant Liability : The D & O Diary Niemeier is also opposed to any overall qualitative evaluation of the firms audited, on the theory that this would "divert attention" from the PCAOBs efforts to identify risks in the audit firms processes. With respect to the timeliness of the inspection reports, Niemeier says that the "timing of the reports has been due to internal operational processes" and that "the time between completion of an inspection and issuance of a report should be shorter in the future." What to make of all of this depends on the purpose of the PCAOBs public inspection reports. If, as with Niemeier, you believe the public reports are designed to provide the audit firms with appropriate incentive to remedy noted concerns, then the current process is adequate. But if that is the sole purpose, why bother with public reports at all? Why not simply reserve public disclosure for those concerns the audit firms fail to address during the 12-month cure period? But the reports clearly are made public (at least to the extent they are made public) for a separate purpose, which is to inform. On that score, as the article notes, the inspection reports "dont paint a clear enough picture about what the auditor overseer was probably trying to say in its reports." Niemeiers comments that added information, such as the number of audits inspected, might be misued amounts to an assertion that investors and others cant be trusted with the information. Clearly, the policy decision to withhold the information is calculated for the audit firms protection, to the detriment of the investing public. These competing interests ought to militate that the PCAOB should go as far as it could to disclose information consistent with its statutory constraints - and subject only to the statutory constraints. The numerical and evaluative information critics argue that the inspection reports lack are not barred by the statutory constraints. The audit firms best protection against vulnerability to adverse information is in their power to control, through their own audit execution. A good summary of the shortcomings of the PCAOBs public inspection reports, with links to other sites, can be found on the White Collar Fraud blog, here and here. Audit Liability Caps: In a prior post (here), The D & O Diary took a look at various proposals to cap auditors liability. In a January 25, 2007 speech (reported here), Conrad Hewitt, the SECs Chief Accountant, came out in favor of protecting the "major accounting firms" from legal liability if their audit clients become embroiled in accounting-related scandals. Hewitt is concerned about auditor liability because there are only four major accounting firms left. "Its a concern to us if something should happen to any of the four firms." So The D & O Diary wonders - is the PCAOBs policy on its public reports of the Big Four firms audit inspections the product of a similar concern for the survival of the "remaining four?" TAGS: Accountant Liability, PCAOB Comments Trackbacks Share Link Looking at Auditor Liability Caps Posted on January 20, 2007 by Kevin LaCroix When the Committee on Capital Markets Regulation (popularly known as the Paulson Committee) in its Interim Report (here) recommended "setting a cap on auditor liability," the Committee relied for support on the steps in that direction that have been taken by the European Commission. In its latest effort along those lines, the European Commission on January 18, 2007 launched a "public consultation on whether there is a need to reform the rules on auditor liability in the EU." A copy of the Commissions press release can be found here. A copy of the Staff Working Paper can be found here. In the Working Paper, the Commissions staff offered four alternative proposals to cap the liability accounting firms potentially face when auditing public companies. (The Commission is asking for comment on the four proposals by March 15, 2007.) The four proposals are: a fixed monetary cap on damages that could be sought from auditors; a cap based on the audited companys market capitalization; a cap based on a multiple of the audit fees charged; or the introduction of proportionate liability , which would hold the auditor responsible only for the damages that could be specifically attributed to them. The initiative to afford accountants some form of liability protection is being led by Charlie McCreevy, the[17-06-2011 22:03:15]
  14. 14. Accountant Liability : The D & O Diary European Commissioner for Internal Market and Services. The initiative would potentially extend protections across the EUs 27 member countries, although the member countries would not be required to enact them. However, the Working Paper notes that "auditors liability is currently capped in five Member States (Austria, Belgium, Germany, Greece and Slovenia)." The Commissions motivation for exploring auditor liability caps is essentially the same as that noted by the Paulson Committee in its Interim Report. That is, the Commission is concerned that as the number of audit firms capable of auditing the largest companies has dwindled down to four, the potential consequences from the failure of one of the remaining firms would be harmful to investors. In an October 27, 2006 interview in the Financial Times (here), McCreevy expressed his concern that "further reduction in the number of global firms would make it very hard for companies to get accounts signed off and published - dealing a blow to investors." McCreevy himself advocates a cap on auditor liability. A January 19, 2007 Wall Street Journal article entitled "EU Offers Plans for Accounting Firms Audit-Liability Caps" (here, subscription required) suggests that the EU proposals "could help a push by the largest firms for similar protection in the U.S." The article goes on to note that the "adoption of a European auditor-liability shield, even if the member countries werent required to enact it, would potentially add to a sense that U.S. markets are increasingly at a competitive disadvantage to those in Europe, and, in particular, London." The competitiveness of the U.S. capital markets will be the theme of a conference that will convened in the spring by Treasury Secretary Henry Paulson. (For a description of the planned conference, announced on January 17, 2007, refer here.) The accounting industry will be one of the three major topics to be discussed at the conference, along with regulation and corporate governance. Robert Steel, the Treasurys undersecretary for domestic finance, in describing the conferences anticipated topics, said that (unnamed) officials are "concerned about the accounting industry," and that the conference will look at whether there are "structural issues" that hurt the industry, such as an "unattractive liability construction." Steel, along with Paulson, recently joined the Treasury Department from Goldman Sachs. Is the PCAOB Shielding the Big Four?: With the anxiety surrounding the possible investor consequences to investors were another of the Big Four accounting firms to fail, could it be that regulators are treading softly around the "remaining Four?" As The D & O Diary noted in a prior post (here), the Public Company Accounting Oversight Board (PCAOB) does not reveal much about its inspections of the Big Four accounting firms. For example, the PCAOB does not reveal the number of Big Four audits it inspects as part of its annual inspection process, or the percentage of audits inspected that proved to have concerns - even though it releases this information for smaller firms. A January 18, 2007 post on CFO Blog (here) reports on a recent speech by PCAOB founder and board member Bill Gradison, in which Gradison suggests that the PCAOB considers itself a supervisory body rather than an enforcement agency, and so the agency wants to work with firms to restore "integrity" and even "luster" to the profession. For that reason, the PCAOB prefers to give the audit firms a 12-month grace period to fix problems, rather than to make them public when they happen, since "reputation is so important in a field like auditing." While I am sure the accounting firms appreciate this deference to their reputation, investors interests are definitely forced into the back seat by this ordering of priorities. As my prior post linked above notes, the PCAOBs annual inspection report disclosure leaves a great deal to be desired from the investors point of view. First and foremost, the PCAOB ought to inform investors what percentage of audits inspected produced inspection concerns. In addition, the PCAOB ought to tell the investing public how many of the audit concerns were material, which audit concerns were material, and what order of magnitude the material concerns represent. TAGS: Accountant Liability, International D & O, PCAOB, Paulson Committee, Regulatory Reform Comments (2) Trackbacks Share Link Copyright © 2011, Kevin M. LaCroix. All Rights Reserved.[17-06-2011 22:03:15]
  15. 15. Accountant Liability : The D & O Diary The D & O Diary PRIVACY POLICY DISCLAIMER Kevin M. LaCroix 2000 Auburn Drive, Suite 200, Beachwood, OH 44122, Phone: (216) 378-7817 Directors and Officers Liability and Insurance commentary, The D & O Diary, Kevin LaCroix of Oakbridge Insurance Services, offering services relating to securities laws, class action lawsuits, subprime litigation, options backdating, corporate fraud, D&O litigation, indemnity, Sarbanes- Oxley, white collar crime. DISCLAIMER: The views expressed on this site are exclusively those of the author, and all of the content on this site has been created solely in the authors individual capacity. This site is not affiliated with his company, his colleagues, his clients, his relatives or any other institution or person living, dead, or yet to exist. Quotations from this site should credit The D & O Diary. However, this site may not be quoted in any legal brief or any other document to be filed with any Court unless the author has given his written consent in advance. This blog does not intend to provide legal advice. You should consult your own attorney in connection with matters affecting your own legal interests.[17-06-2011 22:03:15]