Lobbyists - because it's hard for politicians to decide stuff on their own.
Reuters broke a story on Friday, March 9, that I find to be very, very troubling. In “Exclusive: Ernst & Young tightropes between audit, advocacy,” reporters Dena Aubin, David Ingram and Sarah N. Lynch say that,
Corporate audit giant Ernst & Young operates a lobbying firm in Washington, D.C., that has been hired in recent years by several corporations that were at the same time E&Y audit clients, prompting two senior lawmakers to demand closer regulatory scrutiny.
As identified in the story, the lobbying arm is Washington Council Ernst & Young. I’ve heard of it before.
All of the Big 4 claim to partner with their clients. I’ve argued for years that such a relationship seduces audit firms sometimes to approve questionable financial statements.
Surely lobbying for a corporate client is way over the line. I doubt that any audit firm that in Washington advocates for clients would fail to do the same when considering an opinion on financial statements.
Aubin, Ingram and Lynch report that E&Y spokesman Charles Perkins disagrees:
Ernst & Young said Washington Council’s work complied with independence rules. It was pre-approved by clients’ audit committees and it was limited to tax-related issues, E&Y spokesman Charles Perkins said in an e-mailed statement.
The firm does not solicit votes on legislation for E&Y audit clients, Perkins said.
“We assist clients in monitoring public policy, analyzing legislation and educating Treasury officials, the IRS, legislators, other policy makers and their staffs about the potential consequences of legislation,” Perkins said.
I have always thought that one way to describe lobbying is it educates government officials about a client’s position, and the potential negative consequences to the client of proposed legislation or regulations.
Whether within the letter of the rules or not, E&Y lobbying stinks. It reminds me of E&Y clean audit opinions on Lehman Brothers financial statements distorted by Repo 105. E&Y thought that was within the letter of the rules, also. It didn’t make it any less stinky.
Debit and credit – - David Albrecht
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