Penny has yet to drop for auditors:PricewaterhouseCoopers got a slap on the wrist from the US audit regulator this week.The Public Company Accounting Oversight Board said the firm “may not be applying an appropriate level of professional scepticism in subjective areas susceptible to management bias”.
Interestingly the criticisms were contained in a report prepared in 2010 but only released this week.
The US body has a policy of only naming firms if it decides they have not taken sufficient steps to remedy problems in the 12 months following the publication of an annual report detailing failings but not naming the firms in question.
The report has no legal implications for PwC but is obviously embarrassing and the firm told the New York Times that the issues “relate to some of the most complex, judgmental and evolving areas of auditing” and said it was committed to improving its work.
This is the latest in a series of similar criticisms of auditors, the most recent being the UK Competition Commission report last month which found that auditors are unduly focused on the needs of the management that hire them rather than the shareholders who ultimately pay them.
Prior to that, a report, issued by a Canadian regulator, that looked at audit firm inspection results from Canada, Britain, the United States and Australia, concluded that the most common problem found was that “auditors are too often accepting or attempting to validate management evidence and representations without sufficient challenge and independent corroboration”, according to the New York Times.
The question for the profession is fast becoming how many times does it have to be told before it accepts it has a problem?
Up close and personal with Merkel
When Christine Lagarde walks in the room, men melt. When Angela Merkel walks in, buttocks clench. That, at least, is the received wisdom.
As International Women’s Day passes for another year, it’s worth considering how these two women wield power in very different ways.
Ask anyone who watches IMF chief Christine Lagarde on a regular basis and you will hear adjectives like intelligent, charming, tough but fair. Angela Merkel rarely gets such love letters.
So what if Lagarde and Merkel did a job swap? Would Angela Merkel be an effective IMF head, prowling the world and dispensing “must try harder” grades to loan recipients on their quarterly report cards? Could Chancellor Lagarde use her charm to defuse resentment of Germany in Ireland and winkle out of taxpayers the final controversial bond and loan repayments?
Put another way: how far have public perceptions of these two powerful women influence perceptions of Berlin and the IMF in bailout-era Ireland? And do subjective views of personal style influence perception of political substance?
At the World Economic Summit in Davos, Christine Lagarde used humour and rhetoric to win over a high-powered audience. Angela Merkel garnered perfunctory applause with a workmanlike address of largely recycled messages.
The curious thing is that anyone who has met Angela Merkel in private now she can be just as charming and witty as Christine Lagarde. So why does she never let it show?
Some confidantes suggest she is a naturally cautious person, coloured by her East German socialisation where a poker face was always a good public mask.
And is charm essential to getting the job done in politics – or at least creating that impression? Despite the negative anecdotal evidence against her, polls show that two-thirds of Germans think Merkel is doing a good job. She remains the most respected EU leader, too, according to a poll conducted last year in eight EU countries by the well-respected Pew Research Centre.