We still have time to work. Im going with. What furth. Ah, theyve been called the watchdogs of capitalism. The conscience of the free market and the pin striped mafia. The big food auditors, ernst and young k p, m, g, b, w, c. And still with the big 4 are incredibly influential in a market because they are indispensable experts with an in depth knowledge of companies and tax law. Theyre much too powerful to me. They influence politics and legislation prevents or to come to work without the big for have an Important Role auditing, corporate Financial Statements. Its extremely important for us as consumers and for people who are in this, this to trust the information we are given. But are they doing their job in 2020 the why cant scandal shook germany from bells and from the stock market favorite to fraud company. So i have never before. Has there been such a plummeting docs and sing lung audited . Why cause Financial Results for years without uncovering the fraud is counties signed as feler d for mistakes from 90 years ago, which led to our profession should not have repeated us here. You dont have to be an angel in order to make a good audit. You just have to be independent. Each new scandal put the big order. His in the spotlight. Are they taking shortcuts . Are they overwhelmed . Or is the system at fault . Oh, yes, ah. Thomas here, good is retired. His passion is building guitars with a pension of just under 2000 years. The former High School Teacher says he is enough to live comfortably. But hes also managed to put a little aside. I dont ask it. I thought if you put money in a checking account, inflation takes it wouldnt. Oh, instead he invested most of his savings in a promising german company, which did i did kind these equal sliding homage. Im not a risk taker home, which is why i didnt buy just any stock. Even i bought why i got caught up in cost of it had seemed a safe bet. But then the company suddenly crashed along with the chairs with the stop to computers. I couldnt afford so big that the stock would become almost worthless. I didnt think it was possible is my too early. Shy . Why cant lost a total of 10000000000 euros in market capitalization . Raising many questions. Me though is how could he owe to the follow along that the Payment Processing company was fudging as well and seeing 0 younger finance minister blames the private auditor. The foot ice climb under a small investor like made con, check where the wire card statements are true. Austin more damaged. Thomas hacket has joined a Class Action Lawsuit against white cards, auditor clift. They carry some blame. They should have been more careful missing. But who are thomas haggard in the other small investors up against ernst and young o. E y became the song auditor of wire card in 2011. Together with p w c, k, p m g and deloitte e. Y is one of the big for the for largest Accounting Firms. Together they employ 1100000. 00 in and around 150. 00 countries and they ordered the Financial Statements of almost all major companies. Silas tells home is doing her ph. D at copenhagen business school. Shes been researching the big 4 in the role they play in the economy and size for years. Auditing is something that is required. This is something that is extremely important for well functioning market economy every medium or Large Company is required to have its annual Financial Results reviewed by an independent auditor. For a market economy, its extremely important for us as consumers and for people who are invest us to trust the information we are given. And our only weapon really is the audit ah. In 1929, the start of the great depression, companies and banks around the world rush to hide their financial problems. And countless people lost their jobs and savings, including hundreds of thousands in germany when indies. This was the context in which legislators introduced statutory audits for Stock Companies in 1931. Hes off garbage in virtual twin about harden. Globalization accelerated the economy. Companies grew quickly informed, International Networks. Auditors grew to in the 1980s, 8 Accounting Firms dominated the International Industry a expanded and merged forming the big 6 then it became the big 5. And just a short while later, the big 4 k p and g, a y, d light and p w. C in germany, the institute of public auditors or i d. W, helps influence or the scene rules. The privately run organization represents the interests of more than a 1000 public auditing firms in germany, including the big fool ah, klaus peas in no mans says the job, the auditor is clearly defined. Ah, desk auditors are required by law to carefully verify annual Financial Statements spoof mm. They are also supposed to maintain professional skepticism toward the companies they audit and follow a specific procedure. Ah, an actual spoof of the stove us an audit is designed to detect errors in Financial Statements of today with a jew to fraud or not is irrelevant, would only be between entities for camida when a Company Opens its books, its business is light, theyre in numbers order to see where money flows in and where it then flows out. Bank accounts, marketing costs, operating expenses and acquisitions. The big of the company, the more complicated this flow of money can be ordered is generally cannot examiner company in its entirety. They instead choose an area to focus on the one where they suspect the highest risk. They compare the companys statements with the actual Financial Transactions to get an understanding of each of the transactions. If the order to find snow falls in the companys annual Financial Statements, they give whats called an unmodified opinion, a seal of approval for the comp. The oldest is verdict, a wire card was trusted for many years. And to this day, e y maintains it audited. Why cant the best of its knowledge and according to protocol, than by social to nym missed so interested if Companies Like that land and auditors dont notice its over, because then we can no longer rely on the very foundation of the business live. Namely, the number is my philosophy ah, fabio demise. He co chair, germanys why cod Parliamentary Inquiry Committee together with parliamentarians from all political parties, democracy began investigating the German Companies collapse and october 2020. The Committee Questioned a 110. 00 witnesses of and 9 months. One of the key questions did e, why make mistakes . The why cant, scandal was not the 1st time the big old just had to face criticism for 5 years. Horizontal Boring Machine company flow, tex inflated eats results with fake sales. And k, p m g didnt notice then either leading to damages of more than 5000000000. Toich mocks, the biggest White Collar Crime ever in germany. With in the u. S. Energy company, enron inflated its profits for years. Its ordered to Arthur Anderson was one of the big 5 back then. And once again at the auditor failed to detect the fraud and wrong filed for bankruptcy in 2001 and senior anderson employees destroyed Company Documents without permission following the scandal. The auditors surrendered its license to audit listed companies, but it never recovered and was eventually dissolved in 2008. It was Investment Bank lehman brothers, filing for bankruptcy. Lehman had used to counting tricks to hide its financial situation. Yes. And he was kept approving the cook books ah, the bell markets are in shock. The stocks are plummeting. Lehman brothers eventually collapsed and a massive debt in 2008 triggering the largest financial and economic crisis since the 2nd world war taxpayer money was used to save banks around the world. 59000000000 euros in germany alone escaped diesel for an certain failure from these are isolated cases of corporate fraud that auditors failed to detect at so few. And each case is one to many aust scenes. But can we say that because of these 10 scandals, the 90 years of auditing tra, which checks thousands of Financial Statements every year, how it doesnt work was performed. We should order is really help and cover corporate scandals on possible explanation is that there are conflicts of interest ah, Companies Hire and pay their auditors themselves. A practice based on a government assumption that companies have an interest in being properly audited. Then the vote trust. East de, from auditing this, the public trust in a company and finances in all use vote, shuffling. Front. Antonyms that and me ring is an expert on Financial Statements and a consultant. She says the fact that Companies Pay their auditors is problematic, or many lies to happen. To this student in the chair and the sign, but if we agree on the deadline and i dont meet it, increasing costs. And then the client might say, i see that you stay within it or next year will hire another old non profile on swarmed l 2 is all too familiar with this pressure. He worked as a junior auditor, p w. C in luxembourg for 2 years. For the cathedral was basically an auditor, see something, you know, its against his interest to speak up, especially if they dont want to correct it just, its impossible to audit well a moment. Mm. And theres an additional factor complication the Auditor Company relationship next to auditing. The big 4 also offer consulting. They advise clients on digitalization, st. Fillasy and texas. The big 4 are incredibly influential in a market economy. They have a lot of services that really impact how business is done. Sinus town home says this creates yet another conflict of interest. You cannot see someone as a your client and then also investigate them critically. As the regulator, you have to be on one side or the other. The big fours call business use to be ordering. But now at any accounts for around a 3rd of their revenue. Around 2 thirds comes from consultancy. Then its not to revise. If i know the auditing market has limited and fees are essentially stagnant, and consultancy is the opposite. Then it makes sense to offer the latter using it not to 1st end date does and lies them. And the beaten village husky had a fluke. Z kept valley, take it in devil trotter whooping square draft when he moved to not doing well financially. Insurance quality at the auditing firm. Im in the or id like to add thats doing well financially. Also secures financial independence. Not pinkies. Im the only one who isnt financially independent and is probably most likely to look the other way and for a client that theyre auditing, when they shouldnt have been a neat to loiter profit made from consulting and she has. Auditors can remain independent, at least according to class, peter norman. But if this theory truths are ordered as independent from the clients choose another form a p, w. C. Employee shared his experience in the us. Now, robot worked as an auditor, p w. C, for 18 years. The problem is that Many Companies that i experience didnt have the competency in house to document the complexity of the transactions that they were doing. But the, instead of hiring 3rd Party Consultants to do that for them, the auditors was doing this for them. Because again, once you do that, management likes, you will be auditory not supposed to do that because the auditors should audit if the other part ends up doing it. Then who are the, the auditors, but have repeatedly reported his findings to his superiors. Since i thought the report of those things internally in my performance rating start at 2 get actually the line and i was not allowed to work on jobs progressively in. This is how our water says it. Records shows that his superior said potter was too critical of his clients management, and to hire comp auditor that are more friendly or less inclined to give negative control opinions. Which meant that if we alone was the one that were giving adverse control opinion, when the other 3 did not, we will not have been high ever been the market morrow bottle was 5 in 2017. His city for reinstatement was dismissed by California Court in august 2021. Ah, michelle destroys the Certified Public Accountant and chairman of the association. So Medium Sized Company auditing. He says the big for forcing small auditing firms out of the market. Just one of the reasons why hes been campaigning for years, restrict a separation between odyssey and consulting her as a not pinkish keisha. You just cant trace what a fact consulting has on the independence of the auditor, and for, for the vacant emphasis of the proof of hunch. Post mila with following the financial crisis, the topic was put on the easy, which ended in 2010. E commission and michelle banging also felt the independence of auditors was at risk a if you so is it healthy for the same firms to be auditing and consulting . It you can say docile called dexter is complete independence even possible in that context. Im all bushy. Domlyn schools are often when we hoped, what he said would become reality veterans criteria. Vanya wanted to strictly separate auditing and consultancy. He also said, company should be required to change auditors every 10 years. As for the and of course, a lobby, what followed was a lobbying campaign which michelle bonnie, a correctly described as the Biggest Campaign ever in brussels. The tub san diego was the coordinator of the e committee on economic and Monetary Affairs until 2021. He saw lobbyists working for large auditors exit political influence in brussels. The reading a 2015 in china, striegel, theyre talking to the Decision Makers and theyre meeting them early on him and when its crucial, as of at the commission your at the ministries of the members state, often in the, in hotly anything remained of Michelle Danis ideas Member States themselves got to decide which e audited reforms. They introduced me as a specific date cuz everything was watered down just is up to a special origin. Mm. Gemini, introduced several exceptions. Auditors could still act as consultants to companies. They audit, they could order the company for longer than 10 years. How this reform developed reveals another potential conflict of interest. New this we know the big for regularly getting lucrative consultants. The contracts with german ministration is 10 offloading e, y, and even after wire card or not, these consultancy contracts still exist will begin by a few problems. And these problems show that the best people no longer work in the ministries. Ishmael, the best law to hobble this problem also applies to the oldest to watchdog known as a p i. Yes. In germany i. P. S. Checks with the order is maintain their independence. As a half its employees used to work at one of the big for so if you have a system where there are 4 organization that have penetrated the Government Institution that are supposed to oversee them, they are essentially untouchable. Doesnt miss austin has to rely on external expense in the big for a very happy to offer their expertise skips it in peak for when it comes to the big for theres a kind of Conspiracy Theory about house them shady power influences everything buys its but thats just part of a desperate search had to find a physical power not behind. Global capitalism include knocked her in global is yet, and capitalism was about. But they are obviously the influential players. Misty, got to i was like an army, howard gives them political slate. Ah, for antoine dell to getting a job, the big fall was a great opportunity. He started working for p. W. C in luxembourg in 2008. I did associate, im interested in numbers and im analytical. And so this was a good fit sample nebula. He believed auditors could positively Impact Society some its year, very important for auditors to be independent. This will kill us societies rely on Financial Data being corrected at the national sir. P w. C is demanding employer with long working hours and high pressure. At the time, antoine adult, who began to understand how luxembourg worked as a Financial Center in a demo system. So digital fits mormon lamoya. Steve osgood did the some audits really shocked me because i was investigating empty Shell Companies called no implies no revenue. Her no real Economic Activity and luxembourg, collectively taken and were supposed to create transparency, lifted up vomiting. But whats the point with empty shell . So they could it either infected. So that was a non, to until to became disillusioned about the societal benefits of working. As an auditor, a pete of the said he lost his motivation. After 2 years, he resigned that before leaving, he came across confidential tax returns. I showed that luxemburg glued International Companies with deals tailor made by p w. C. That slashed Corporate Taxes to less than one percent. Thats english gets down bys and the every tax trade just short of illegal is being used to move profit made in one country that high into another country to be taxed at a lower rate in an unknown land. First oil. Bradon vol. Done. Not foolish. Disturb last only to the ghost. P w. C. Even prepared tax, rollins with the letterhead of luck. Some pugs tax authorities. Government officials just had to sign the Price Waterhouse coopers. R o t w. C was practically a division of luxembourg financial administration. Its unreal, wendy, on tanelle to was shared the documents with a french journalist. And he was then charged by locks under the saw. Shes in 2014 for leaking documents, bought in 2018, he was recognized as a whistleblower. He w. C. Isnt the only firm selling such Tax Strategies they bring in a lot of money for k p m g e, y, deloitte, and other Tax Consultants all over the world . Yeah, of course. That is some extra spy sets of the discussion and the big for particularly when you think about how important they are for of functioning maggard economy. Its little bit worried that they are also it the ones who undermine the society in some ways, by showing it businesses how they can practice it takes aggressive us according to the european commission, the e, you lose is up to 70000000000. 00 euros a year to, to a Corporate Tax tricks around half of the use annual budget. Their goal is to shop biggest damage is that people feel like some people are above the law and those who get expert biases have an International Network and dont pay their taxes. This low as the entire systems legitimacy for the schism to store the steam, the common z in a z, ashley, yellow z 2 or to one vanderbilt, a smaller, vaster, difficult area. 8 to one. Is that morally objectionable to use tax laws put in place . But the legislator whos the sovereign ed skibo does as he had his violin zips gazette, stud tax competition, also causes tax avoidance. Because, you mean where does an incentive for some as a strategy for someone else and consultants are supposed to tell their clients about the various opportunities ministers out style bladder would have a trust spoof, anita if its a tax consultant or auditor. Hm. My, i dont do that is i can, my clients can like their say, i caused them financial damage vide because i didnt tell them all the options isnt one of the legal options, legalities to reduce their taxes. It would, you want managed, wireless skipped but the big for arent just advising their clients. What is very problematic is that many are also involved in legislation and other things in ministries thats cable. Im being retarded and minnes tell him. Every country has its own tech floors and the resulting complexity leads to a need for expertise exactly what the big for, and their International Networks offer via zene by the but i to get one to niemen, var consulting allows us to see where the problems in the tech systems are one of these, amino, and retail politicians, the government, the finance ministry is to you on the Parliaments Parliament of maxim. This conversation is okay to speak with experts off even Business Experts about. But when theyre practically co writing laws, without the public or even parliamentarians knowing thats a problem with us. So somebodys in problem spring 2021 e y audit has come on to scrutiny. By the way, i caught Parliamentary Committee with a team of oranges was appointed, a special investigate is the committee asked them to review e wise black card ordered they findings was summarized in the when back report pulled out confidential. It was linked to some journalists ah, felix haltermans works the handle, split the gym and financial paper, and had been following the wire card case for a long time. His desk also got a copy of the one back report. Deb amber placed at 60 gaster. The van back report is the 1st public audits of one of the big fours work with us with the findings are crucial forgiveness. They are all offish dish be investigators looked at recalls from 2016 until 2021 and tried to ascertain with an e. Why should have uncovered the fraud earlier . Mm. I cut of an inside in 2016. Wire card, bought a dubious indian Payments Firm for a great deal of money. And therefore, a suspicion arose that wire card managers. I made money off the deal at home in response in my started project ring a Forensic Audit according to the went back report. But there were problems with the exceeding from by wire card management. I didnt sufficiently explain why they had overpaid for the take over the one that proposed introduced a letter from march 29th 2017, written by the eager auditor and addressed to the chairperson of whack. Her supervisor report to todd sandys appointed, missed actually called stetson. If these points are not conclusively clarified halford and yet there may be a modified opinion for the Financial Statements. We would also like to inform you that we will decide whether we can continue to Work Together based on your reaction to this letter. E, y is threatening to not give an unmodified opinion of a bygone to withdraw from the auditing mandate talked would this would have been a disaster for why a cart. A modified opinion alone is enough for investors and banks to lose trust. But it would have also been a bit like realty for the auditors. Acknowledge her not even the week after this lecture. We dont know what happened during the time the why delivered opinion . When modified did e y received the information they needed . The special investigators said the following in their report. The information include verbal and written explanations by the Management Board. Appropriate clarification at the open points cannot be found in the documents then you should be, dont even want to see if im just having the board confirm things, then theres no point. Then i may as well skip it. But i need to maintain a skeptical attitude and assume something is incorrect. Skimmed this is the only time e y spotted problems at y caught in the Supervisory Boards. Notes which handles black obtained the auditors said the following in 2019 to tat 5. Under quote, doubts about the managements integrity. Life at e, y doubt, the boards, integrity, pretty much the strongest statements and auditor can make and who forgot to preface can put in 2019 e y again gave wire card and unmodified opinion. But they did refer to fraud investigations against wire card employees and singapore. In their final report, e y said the following in a written statement. Very few annual Financial Statements of Tax Companies have contained such statements. This alone shows that this was an unusual measure. But the auditors comments received little attention and wire card skillfully concealed its true value in the final report. As of them on the land. If you look at the Balance Sheet, you see 2700000000 euros in cash and cash equivalence. Nothing about how this also includes money in escrow, went and did that with the current mckenna lion summit. Soon on the financial statement, it looked as if y. A card was swimming in money and sent young. Had an id through the years. It was auditing has armed ernst and young a failed to attain independent confirmation that these funds existed. The desk had, instead you why relied on trustees latham in a written statement, e y said the complex criminal web was designed to deceive numerous stakeholders, including investors, bank regulators, Supervisory Boards, auditors, despite their diligent and extensive efforts. Mm. E y had become suspicious, but it seems they none the less continued to trust law cards Management Board in key moments. And so if i a y relied on board statements while simultaneously doubting its integrity by food, even as an external observer hannibal buffer that makes you wonder how e y could have issued audit certificates all those years. Wanted to this day, its unclear why a, why would it as did not heed the many warning signals. The damage to the reputation is considerable. Clients such as Commerce Bank to which a telecom in k w, a Government Bank ended, they aud seeing agreements with e, y in 2020 munich state, prosecutors opened investigation into the pot and has it. E was ordered at y caught june 2021. The Parliamentary Inquiry Committee presented its final reports on why i caught these up between this broad should have been stopped. Early on, ladies and gentlemen, again, playing with young black foolish, the auditors should have verified whether the 1900000000 euros one 3rd of the Balance Sheet was actually in a philippines escrow account. Ive been on some of my employment counsel in philippine leaked. You open, i. E wise, high earning auditors failed to be in because according to the committee, it was not. And the audits who failed to far the case has exposed a radical failing by authorities, especially by bar offend, might have often boffin is jim and his financial supervisory authority, responsible for monitoring small banks, Insurance Companies and Securities Trading blue. When in 2019 fresh fraud allegations against y cod caused a steep drop in its share price, barf in band infest is from betting against the Company Without verifying whether they will problems with wire cards Balance Sheet. The financial regulated claim to that was outside its responsibilities. If im not responsible for something, its not my fault. Last, well all ive schultz was finance minister at the time and the head of baffin. He held that position from 2018 to 2021. Charles told the Parliamentary Committee, he didnt feel baffin had protected. Why cant thought he conceded that state controls to prevent and detect financial fraud were insufficient. Bishop is felicity does for you. Thats why its so important for us to do everything by ensuring our powers and rules are strong to prevent a repeating them thus employ hitting lopez soon. The german act to strengthen Financial Market integrity or fisk was passed in june 2021. The law was supposed to help strength and confidence in the gym and Financial Market and place more comprehensive rules on auditors with fisk gemini implemented the e o auditing reform proposed by Michelle Benet in 2011 p obligation to separate the auditing and consulting for major companies. Was taken seriously what it is and now no longer allowed to ordered a publicly traded company for more than 10 years. And orders also have more liability related to audits under civil law. Listed Stock Companies must have affected internal controls. And baffin has more power and is directly responsible for monitoring Balance Sheets. Ah, descript, i legacy parts of this law a useful bar, but when it comes to auditing, as he doesnt go far enough, i would have liked a stronger separation of auditing and consulting kind. Awful, perform bartel, vention escaped him. Fisk, i need to go to and the 1st comment has some good points though, but it wont approve the quality of audits staggered in the end. The fisk may lead to an even more concentrated, ordered market. More rules means more bureaucracy, which often goes beyond the capacities of smaller firms san diego that says the fisk doesnt address the actual problem. Schultz at yet, and it shows introduced strict of public supervision above in the thousands of on. But if the thousands of auditors have conflicts of interest in time and cousins conflict like then, just adding supervision on top is attacking from the wrong. And i english does viet from project in elf e club with his organs were early sign. Lets be honest. Non law can always prevent a wire card from happening. An info we way. I cant. Definitive finan. Cook was an opportunist. He missed thomas hag, it is disappointed. The law hasnt restored his trust venue, shaun who is does money in my ear, and since they say pensions are safe as we move and that everyone should fend for themself, done the government and politicians have to make sure that the order to keep an eye on things organ does uber charge prove her . Oh will please, i always hatch fraud. And before it happens in full head, he didnt talk of all shes kind ah, what would need to happen to that to be guaranteed by would hitting i believe that in every country the, all the thing job should be done by the government not by private companies private corporations always the for profit as it goals, and the conflicts that exist as far as independent, it will never be solved. Fabio did mossey would like to see radical changes to the market system. The paulson voted team and consultancy need to be strictly separated isnt actually quite so law. We need to break up the big plays and we need to require the inclusion of mid sized auditors from middle spanish and porcelain name. When it comes to incorrect Balance Sheets plus pete, and now mom says the companys a primarily responsible of the Supervisory Board has come insure compliance. If the board isnt doing its job, authorities must intervene and buff and needs more. Right. And how much public involvement you would want in any solution and much market based involvement, you would want in any solution. That is a political question. Why a card shows once again that audits cannot office sufficient protection against financial fraud. Markets need reliable monitoring free of conflicts of interest. Ah, india. A toxic tied in deli yamuna river, made from detergent. Indian cities have masses through which problems, which are still managed by hand in some places. But help is on the way robot the fist when the going gets tough, but they might not even be necessary thanks to our genic detergent, eco, india. 30 minutes on d. W. A legal fields. A legal wells. Legal nature, conservation. In southern spain, foreigners of digging up water from a unesco nature reserve a basil, scarce resources in which the authorities are partly to blame. Focus on europe, 90 minutes on d. W. Yes. Good. Is establishing an order and she, june pink, president of the global power china is part of a whole system which believes his time has come. Any criticism of his regime isnt nipped in the bud. Ah, he believes his weight is far superior than that of western democracy. Chinas president , she jing starts july 30th on d, w. Ah, this is d, w. News live from berlin. Ukraine says Russian Forces are in control of its 2nd biggest power plus the capture of the coal fired 2 players. Car pass station is russias latest advance in the east and on bus region elsewhere. 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