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 i