Accounting

Skimpy financial disclosures leave plenty exposed

25 Sep 2024

Few rules require detailed reporting from public companies, leading to variations that frustrate investors. Consider Temu owner PDD’s scant info versus $390 bln Home Depot’s extra granularity. Corporate bosses may fear accountability from openness, but opacity often stings worse.

China’s PwC slap may yet pack a punch

22 Aug 2024

The auditor may get a record fine and a six-month ban for its role in the Evergrande scandal, per the FT. It'll sting, but won't kill the business. Yet hobbling a big foreign player can speed up Beijing's push to have domestic accounting firms take on a more prominent role.

Guest view: Blame poor audits on absent investors

3 Jul 2024

High-profile company failures show audit firms are failing to scrutinise corporate accounts. But shareholders are also falling short, says Natasha Landell-Mills of Sarasin & Partners. They can do more to register their displeasure with weak accountants and board members.

PwC Evergrande hit will ricochet around China Inc

5 Jun 2024

The auditor may be fined $138 mln and suspended from working in some cities for its role in the property giant’s scandal. Rivals may benefit. But with President Xi pushing regulators to operate "with teeth and thorns”, such a decision will be a warning to all financial middlemen.

Memo to McKinsey: Avoiding Arthur Andersen’s fate

14 May 2024

After coughing up $1 bln for opioid-related settlements, the elite consultant may face criminal charges, too. There are notable differences from when a 2002 US indictment killed the auditing giant. But the looming existential threat increases the likelihood of costly concessions.

Capital Calls: Lyft

14 Feb 2024

Concise views on global finance: The US ride-hailing firm mistakenly forecast 500 basis points of margin improvement for 2024, causing its stock to surge some 60% before it came back to earth.

ADM accounting mess highlights risky exec comp

23 Jan 2024

The grain trader’s shares fell 24% after suspending its CFO amid an accounting investigation. One segment generating only 10% of profit determined a big chunk of executive bonuses. Whatever emerges, putting so much weight on small shifts in results invites problems.

Big Four scandals will derail breakup plans

5 Oct 2023

EY and PwC are dealing with issues in their tax and consulting units. In this Viewsroom podcast, Breakingviews columnists explain how falling valuations of rivals like Accenture as well as questions about the stability of consulting fees will mean these firms may stick together.

Big Four consulting stains muddy breakup case

2 Oct 2023

EY and PwC are under scrutiny amid a tax scandal and accusations of shoddy work. The case for splitting these companies depended on their advisory arms delivering racy growth. But with dinged reputations and valuations of rivals falling, breaking up will be even harder.

PwC Aussie mess is classic do as I say not as I do

29 Sep 2023

An independent review sparked by a tax-leak scandal lays bare governance failures at the advisory firm including an overly powerful CEO, a supine board, poor risk processes and, ironically, an aversion to external help. Fixing those is just the start of the company's turnaround.

PwC cauterisation Down Under leaves infection risk

26 Jun 2023

The accounting firm’s Australia outfit hopes a new CEO and the sale of its government advisory unit for less than one dollar will stem a conflicts of interest scandal. With a tainted brand and probes continuing it’s unlikely. Keeping the fallout in-country would be a victory.

EY’s failed split raises stakes for Plan B

27 Apr 2023

The Big Four professional services firm called off a plan to separate its audit and consulting arms. In this Viewsroom podcast, Breakingviews columnists discuss what went wrong, the implications for its rivals, and the pressure on EY bosses to show the intact business can thrive.

EY’s split fiasco will spark slow-motion decline

25 Apr 2023

The audit giant’s bean-counters are insulated against a rapid loss of business after its failed breakup. But EY’s more profitable consulting arm, including its prize tax unit, is less so. More reticent new clients and staff may see the Big Four become the Big Three-and-a-half.

EY’s faltering breakup plan tightens Gordian knot

30 Mar 2023

A plot to hive off the consulting unit from the audit practice has stalled. EY has two realistic alternatives: sell a slice of its advisory business, or stay intact and focus more on lucrative consulting work. The catch is that a failed breakup could still leave lasting damage.

China’s U.S. audit capitulation is rare win-win

16 Dec 2022

Beijing has let American audit watchdogs inspect its New York-listed firms, the first concession of a years-long spat. In return, over $1 trln worth of equities, including Alibaba, can keep access to U.S. markets under stricter enforcement. China is better off losing this battle.

The complexities of EY’s big breakup bet

6 Dec 2022

The Big Four firm is pushing a plan to separate its auditing unit from its consulting business. In this Exchange podcast Andy Baldwin, global managing partner, discusses the challenges of convincing partners in over 70 countries to back the split – and what happens if it fails.

FTX affords a turning point in venture governance

17 Nov 2022

New CEO John Ray uncovered patchy balance sheets and signs of looting at the bust crypto exchange. What he calls “a complete failure of corporate controls” means users may not get repaid. Formidable backers like Temasek and Sequoia would be crazy to make the same mistakes again.

KPMG’s China blast from past has broader warning

6 Sep 2022

The auditor is being sued in Hong Kong by liquidators of a U.S.-listed mainland firm that collapsed in 2012. It’s a reminder to investors, including those facing defaulted developers like Kaisa, of the obstacles and time taken in recouping money from troubled Chinese companies.

Audit deal will leave traders with China dregs

29 Aug 2022

Beijing has conceded to U.S. demands which could let $1.5 trln of New York equities skip delisting. If the accord holds, the companies Chinese officials are likely to let cooperate will have no strategic importance. Most of the ones that stay will be very risky, boring, or both.

China-U.S. audit deal success is a long way off

26 Aug 2022

Officials may be close to allowing Americans to inspect mainland audit files in Hong Kong, per media reports. New York-listed Alibaba and peers jumped on hopes they can remain listed. Yet a successful accord will need a level of cooperation not seen in 15 years of wrangling.