Accounting

Crypto smackdown does more harm than good

8 Jun 2022

The SEC wants firms that safeguard digital assets to mark that risk on their balance sheets. That means certain lenders may have to hold more capital against crypto. Though guardrails are useful, the measure could shut out banks like Goldman and incentivize more shadowy businesses.

Big four breakup plan, America’s big spenders

2 Jun 2022

EY is considering splitting its audit unit from its fast-growing consulting practice. In this Viewsroom podcast, Breakingviews columnists debate a possible $60 bln valuation and why the plan may create few winners. Also, inflation is creating a murky economic picture stateside.

Big Four split would have few winners, many losers

31 May 2022

EY may separate its accounting arm from the unit that advises on strategy and IT. The consulting spinoff, worth some $60 bln, might win more business due to fewer conflicts and scandals. Yet the rump auditing business may struggle to attract staff, and push up prices for audits.

Biotech’s EBITDARD hype risks impairing its growth

14 Apr 2022

Prenetics, supplier of Covid-19 tests to cruise lines, airports and England’s Premier League, has won U.S. approval to float by merging with a blank-cheque firm. But the fast-growing outfit excludes R&D costs from a key financial metric. That’s a warning sign for investors.

Martin Sorrell’s latest S4 pitch falls flat

31 Mar 2022

The former WPP ad man says a last-minute delay to his digital media upstart’s accounts are not a cause for concern. A 40% share price drop suggests investors disagree. S4’s breakneck growth targets and quirky corporate governance leave it exposed to undershooting positive spin.

Capital Calls: Clariant’s whistleblower woes

14 Feb 2022

Concise views on global finance: The $6 bln Swiss chemical firm’s shares fell by as much as 20% after it delayed 2021 results due to an accounting probe.

Capital Calls: Deutsche and DWS, Big Four

9 Dec 2021

Concise views on global finance: The German bank’s ownership of the asset manager looks less appealing after an ESG reporting scandal riled U.S. regulators; a record $167 bln in revenue will soothe the accountancy giants’ breakup pains.

French investors are collateral damage in EY spat

24 May 2021

Paris-listed Solutions 30 published its 2020 annual report even though the audit firm didn’t sign off its accounts. Post Wirecard, it’s encouraging that auditors are taking a tougher stance. But with lenders potentially pulling credit, it leaves shareholders in a painful limbo.

Guest view: A qualified opinion on UK audit reform

28 Apr 2021

Corporate collapses like Carillion and Thomas Cook highlight flaws in accounting for capital and dividends, argues Natasha Landell-Mills of Sarasin & Partners. Proposals to restore trust in accounts fall dangerously short. The government should focus on enforcing existing laws.

Atos’ April Fool surprise is no laughing matter

1 Apr 2021

The French IT group’s shares fell 14% after it flagged accounting problems at two U.S. units. The 1 bln euro hit to its market value looks harsh given they bring in only 11% of sales. Fears of more financial bugs will stymie CEO Elie Girard’s efforts to close the gap with rivals.

Capital Calls: Deloitte castoff, Banks and Brexit

15 Feb 2021

Concise views on global finance in the Covid-19 era: The UK auditor chooses an unfortunate moment to offload its lucrative restructuring practice; The Bank of England pours cold water on the idea of a regulatory bonfire after Britain leaves the European Union.

Guest view: Auditors hold key to climate crisis

28 Jan 2021

Accountants are not obvious saviours for a world threatened by global warming, argues Natasha Landell-Mills. But their central role in vetting companies’ financial sustainability, and their ability to act independently of regulators and executives, gives them a duty to be bold.

Bad auditors need to be fined like bad lenders

6 Jan 2021

Deloitte’s 15 mln pound fine for poor audits of software company Autonomy is light punishment given shortcomings laid out in a new report. The UK’s oversight regime is being overhauled. But doling out heftier bank-style fines is the surest way to shift behaviour.

GE accounting isn’t only thing that’s too complex

10 Dec 2020

A $200 mln fine for bean-counting tricks shows what happens when companies are driven by a desire to hit big numbers at any cost. Larry Culp has moved GE away from that obsession. But the dishonest accounting was made easier by GE’s sprawl. Culp has yet to grasp that nettle.

Big scandals explain small client auditing cull

19 Oct 2020

PwC quit as Boohoo’s auditor amid supply chain failures and governance concerns at the UK fast-fashion retailer. After backlash over EY’s failure to spot $2 bln missing at Wirecard, the Big Four is nervous. Dumping customers who inspire bad headlines and pay low fees is sensible.

GE’s accounting monster still lurks under the bed

8 Oct 2020

As if the conglomerate’s weak cash flows weren’t problem enough, boss Larry Culp may soon have to field an SEC lawsuit over GE’s misadventures in insurance, which long predate his arrival. A bigger problem, though, is GE Capital’s potential for creating bigger, nastier surprises.

Hadas: Wirecard woes show need for fraud-busters

1 Jul 2020

Accountants EY may have been particularly inept in missing fraudulent bank balances at the German payments processor, but auditors are normally right to presume companies are fairly honest. Sniffing out cheating is a job for separate, licensed and powerful forensic specialists.

Wirecard is argument for a Big Four pay clawback

30 Jun 2020

Audit giant EY is embroiled in the German scandal after signing off accounts when $2 bln was missing. Remedies like splitting bookkeeping from consulting or using two auditors may focus minds on finding frauds. But until pay is linked to clean accounts, scandals will continue.

GE’s audit switch wipes away another layer of dust

22 Jun 2020

The company is switching to Deloitte after a century with KPMG, exiting a club of audit lifers that includes U.S. Steel and P&G. It took too long and a radical new approach is unlikely given auditing remains an oligopoly. Still, fresh eyes should make for sharper housekeeping.

Corona Capital: Air travel, Starbucks

14 May 2020

Concise views on the pandemic’s corporate and financial fallout: Airlines’ experienced hands offer warning; Starbucks begins dance with landlords.