Quote: Our Whole Industry Is Useless

Things are getting pretty grim here in the financial reporting & auditing part of the world. The countdown continues:

• 8 7 6 5 4 … 3

In the aftermath of the Valukis Report on Lehman Brothers, rubber neckers are circling the Big 4 in a death watch.  Who will be the first to die.  There are enough lawsuits to finish them all.

The Valukis report considers Ernst & Young work on Lehman brothers to be  “at least grossly negligent,” if not “malpractice.”

• “Our whole industry is useless.”  ~ Unnamed Big 4 Auditor and GoingConcern.com reader from GC’s Quote of the day.  Is this a deathbed confession?

Here’s a strident blog post:

• “What exactly is the point of hiring accountants?”  byMarketWatch. Commentary: Current system provides little to investors

The report on the Lehman Brothers bankruptcy — and the “Repo 105” accounting trick that seems to have made $50 billion disappear from the balance sheet in the blink of an eye — doesn’t just raise questions as to the liability of Ernst & Young, Lehman’s auditor; it raises questions about the entire foundation of public reporting.

What precise purpose does it serve to have a supposedly independent auditor (paid for by the company) sign off on accounts?  The outside auditors themselves are assigned a negligible value by the market.

Solution:  get rid of accountants. Who cares? They add no value, and their expenses weigh on the bottom line.

That’s a bitter pill.

I just love it when common folks get riled up over politicians, corporate execs and auditors.  And they are riled up.  Here’s the Big 4 Auditor’s Rag, a parody of Country Joe’s famous Draft Dodger Rag:

And it’s one, two, three,
What are we fighting auditing for?
Don’t ask me, I don’t give a damn,
Next stop is Vietnam the federal pen;

And it’s five, six, seven,
Open up the pearly gates,
Well there ain’t no time to wonder why,
Whoopee! we’re all gonna die.

Here’s my take:

If the audit industry dies, shall we say it died of natural causes, suicide, or homicide?

It is most definitely a self-inflicted wound.

Debit and credit – –  David Albrecht