...Oracle of Omaha can fall victim to dodgy accounting. On September 22nd Tesco announced that its profit guidance for the first half of 2014 was £250m ($408m) too high, because it had overstated the rebate income it would receive from suppliers. Britain’s Serious Fraud Office has begun a criminal investigation into the errors. The company’s fortunes have worsened since then: on December 9th it cut its profit forecast by 30%, partly because its new boss said it would stop “artificially” improving results by reducing service near the end of a quarter. Mr Buffett, whose firm has lost $750m on Tesco, now calls the trade a “huge mistake”. No sooner did the news break than the spotlight fell on PricewaterhouseCoopers (PwC), one of the “Big Four” global accounting networks (the others are Deloitte, Ernst & Young (EY) and KPMG). Tesco had paid the firm £10.4m to sign off on its 2013 financial statements. PwC mentioned the suspect rebates as an area of heightened scrutiny, but still gave a clean audit. PwC’s failure to detect the problem is hardly an isolated case. If accounting scandals no longer dominate headlines as they did when Enron and WorldCom imploded in 2001-02, that is not because they have vanished but because they have become routine. On December 4th a...
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...Ernst & Young EXECUTIVE SUMMARY Ernst & Young commonly referred as EY, is one of the Big Four professional services firms along with Deloitte, PricewaterhouseCoopers and KPMG Ernst & Young is a multinational professional services firm headquartered in London, United Kingdom and was the third largest professional services firm in the world by aggregated revenue in 2012. The firm has employed 167,000 people and has more than 700 offices across more than 140 countries, providing assurance (including financial audit), tax, consulting and advisory services. In FY 2012, EY earned a record of $24.4 billion USD in revenue, ranking the third among the Big Four, after PricewaterhouseCoopers and Deloitte, ahead of KPMG. Ernst & Young offers its services to companies in a vast range of industries, including asset management, life sciences, mining, media and entertainment, retail, technology, and hotel and leisure. The company's financial reporting segment offers an IFRS/GAAP comparison so companies can compare and contrast the international and US accounting standards. The group's members firms are organized in four geographic areas: Europe, the Middle East, India, and Africa; the Americas (including Ernst & Young LLP); Japan; and the Asia/Pacific region. Ernst & Young is increasingly focused on the emerging markets, which have seen more rapid economic recovery than the developed nations. The company sees the trend of growth in the emerging markets as one that...
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...left open to multiple interpretations. Within the IRC, taxpayers are entitled to numerous deductions that, in essence, reduce their tax liability. The ability to reduce taxes creates an incentive to analyze the Code and utilize every method possible that will help save money. This practice, in turn, opens the door for tax avoidance and aggressive tax accounting. One of the most aggressive tax issues that the IRS faces is the usage of tax shelters. A tax shelter is an investment that utilizes loopholes in order to avoid the payment of taxes. Many tax shelters that have been developed are considered completely legal and follow the IRC properly, serving some major economic purpose. In the late twentieth century, it became common practice for big accounting firms to develop and market different tax shelters in order to reduce their client’s tax liabilities. Some of the tax...
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...The Integrated Communications and Measures Plan PricewaterhouseCoopers International Limited Jing Kang MBA525 Applied Marketing Professor Bari Courts December 6, 2015 Overview PricewaterhouseCoopers International Limited (PwC or “the company”)- one of the famous four international accounting firms, the others are KPMG , Ernst & Young and Deloitte, it was founded by Price Waterhouse and Coopers & Lybrand in 1998. The company provides 6 main parts of sevice, which are audit and assurance service, consulting dealing government service and human resouce service, IFRS reporting and private company service, risk assurance service and tax service. PwC has many huge clients all over the world. Their major customers are IBM, NTT , Dell Computer , Ford, Chevrolet , and Nokia ect. Form the data which show that in the Fortune 500, in the 83% of PwC clients, ther are 29% audit clients. PwC are spread more than 150 countries and they hire over 161,000 staff. In the siutation analysis reprot the company grabs the huge share in the international market. Comparing with other big three accouting company, PwC has three advantages. To begin with is the new consulting service which is designed to help the fledgling high-tech companies. PWC consulting will provide help for the company's early start, create business models and attract investment and other aspects. At present, the company in the high-tech fields of customers including Systems Cisco...
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...United Kingdom and have offices worldwide. I am not afraid of having to relocate and am hopeful that I will be allowed to relocate overseas and experience Europe with my family while working on my career. In addition to a family friendly culture I am concerned with the reputation of a company and their social responsibilty. Pricewaterhouse Cooper embraces those qualities by improving their business practices, reducing their carbon footprint, and giving back to communities. (Pricewaterhouse Cooper's Corporate Info, 2011) They have exceeded my expectations of meeting my desired criteria while researching a potential company to aim for in my career after graduation. Company No. 1 KPMG: Products and Services Commonly known as one of the big four accounting firms they are headquartered in Amsterdam and have offices worldwide with...
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...Olympus cameras began business in 1919 as Takachiho Seisakusho, a thermometer and microscope manufacturing company in Tokyo. It was renamed Takachiho Optical Co. in 1942 and later Olympus Optical Co in 1949, taking its name from its trademark logo, and reflecting the fact that optical products had become the core of company. Today, Olympus’ key business segments include medical imaging equipment, consumer electronics, industrial imaging equipment and scientific devices, including microscopes. Olympus’ downfall began when new CEO Michael Woodford was fired just two weeks after being appointed to the position. He had voiced concerns over corruption in upper management at Olympus, which was later revealed to be a complex, 20-year long, cover-up of losses amounting to $1.5 billion (US) in unreported investment losses. Olympus had invested heavily in risky securities after slow sales and the devaluation of the yen had resulted in lower than expected revenues. These losses, while known to management, were hidden in the accounting of Olympus. Michael Woodford’s dismissal resulted in him leaking the fraud to the press, which began police and other law enforcement agencies’ investigation into the allegations. The company later admitted the fraud, and since then several board members have resigned, and a number of companies have filed suit against Olympus. What these executives had orchestrated was a complex funnelling of money through subsidiaries in order to bury investment losses...
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...rely on information from an audit which is paid for by the company being audited. We are not aware of evidence suggesting that the courts in the UK have made, or are liable to make, excessive damages awards against auditors. Professional indemnity insurance is available, and LLP status – the chosen corporate form of many audit businesses – exists to protect partners' personal assets. The competition arguments 1.3 It has been argued that a cap on auditors' liability would however be procompetitive because it would lead to: • • • 1.4 a reduction in the barriers to entry and growth facing smaller audit firms the maintenance of competition between larger audit firms, including for non-audit work, and less risk of collapse of one of the Big Four. On the basis of the evidence available to us, however, none of these arguments appears compelling. First, the current liability position is a minor barrier to entry in comparison to reputation, third party perceptions, economies of scale, global networks, regulation, and various other impediments to the entry and growth of smaller audit firms. The liability position is symmetric as between all audit firms, so the introduction of a cap would not 1.5 Office of Fair Trading 1 appreciably alter the relative...
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...Chapter 2 THE AUDIT MARKET Revision: 11 September 2012 2.1 Learning Objectives After studying this chapter, you should be able to: 1. Distinguish between different theories of audit services including agency theory. 2. Understand drivers for audit regulation. 3. Understand the role of public oversight. 4. Distinguish between different audit firms. 5. Identify some current developments in the audit market. 6. Portray the series of industry codes of conduct and guidance 2.2 Introduction The emergence of today’s auditors happened during the Industrial Revolution that started in Great Britain around 1780. This revolution led to the emergence of large industrial companies with complex bureaucratic structures and, gradually, the need to look for external funds in order to finance further expansion: the separation between capital provision and management. Both developments resulted in demand for the services of specialists in bookkeeping and in auditing internal and external financial representations. The institutionalization of the audit profession was then merely a matter of time. Management Controls Operations and Communications Management has control over the accounting systems and internal controls of the enterprises that auditors audit. Management is not only responsible for the financial and internal control reports to investors, but also has the authority to determine the precise nature of the representations that go into those reports. However, management...
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...The Effects of Technology on the Accounting Profession Paper Over the years people have switched from filing tax in papers to filing tax online in matter of minutes. This has provided individual with software that will provide him or her with full access to filing his or her tax online. As people continue to newer year each individual will see many changes in the Information system field and these new technologies will makes everything easy for us. The following essay will discuss the variety of new technologies and their effects on accounting processes, ways technologies have changed the way accounting is performed at, and explain corporate accounting, accounting professional services, and audit firms. Over the years we have seen technology change the way each individual does business. Each year companies are introducing new software that allows business owners and accounting firms to create balance sheet, payroll, and bookkeeping in matter of minutes. Business has seen account software like QuickBooks, turbo tax and peach tree to makes the necessary credit and debit for business. One of the new technologies that an individual is introduced to in accounting firms are Intuits quick book and cloud system. Cloud system is a web hosting application located off site. The advantage of cloud system is that we never have to install any account software in the firm’s computer; instead companies install software and store data in a server that is in a different locating. These...
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...CPA mobility: Mia Takamatsu Kurt Inouye Jay Kang Hyosun Kang Table of Contents Introduction.............................................................................................................................. 3 States of the bill....................................................................................................................... 4 Isaac Choy Interview:............................................................................................................... 5 If CPA mobility law passes, how much percentage of your clients do you think you will lose? 5 What makes Hawaii laws that much more stricter or complex compared to the mainland? 5 Do you see the need for CPA mobility, Hawaii’s cpa’s can practice in other states, but when other CPA’s come here they cannot? Reciprocity laws are only in Massachusetts, and Georgia............................................... 5 How long can Hawaii stay out from CPA mobility?............................................................................................ 5 How many more laws do we need to support the CPA mobility bill?................................................. 5 Do you think the quality of Hawaii’s accounting industry will go down or up?................ 5 Who is Jill Tokuda, why would she introduce the bill?............................................................................... 6 Who do you think would be good to contact for issues regarding...
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...1924 both firms “ allied with prominent British firms”( ). Ernst and Young never met one anther and died days of each other. Their firms combined in 1989 forming Ernst &Young. Ernst & Young provides audit, tax, business risk, technology and security risk services and human capital services worldwide. Ernst & Young is one of the “Big Four” accounting firms. The company has over 190,000 employees and operates in over 150 companies. There are steps in planning an audit and designing an effective audit program. When it comes to planning the auditor must first decide whether or not to accept a new client. The audior must identify “ whey the client wants or needs and audit” (p 209). The auditor must obtain an understanding with the firm about the terms of engagement to avoid any misunderstanding and the auditor must develop “an overall strategy for the audit, including engagemetnet staffing and any required audit specialists” (209). When it comes to designing an effective audit program the auditor must first “ use risk assessment procedures to determine the appropriate emphasis on each of the other four types of tests, the specified audit procedures for each type of test must be designed”(p. 412). First the auditor must test the operating effectiveness of control policies and procedures in support of a reduced assessed control risk. There has to be testing for monetary...
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...CORPORATE GOVERNANCE LESSONS FROM ENRON SCANDAL The Enron scandal is the most significant corporate collapse in the United States since the failure of many savings and loan banks during the 1980s. This scandal demonstrates the need for significant reforms in accounting and corporate governance in the United States, as well as for a close look at the ethical quality of the culture of business generally and of business corporations . PROBLEMS : Paying directors with stock may have aligned their interests with shareholders', but it's just as likely to have created a motive for not asking the tough questions. Disclosure rules may have alerted investors to the fact that one audit committee member had a potential conflict of interest, but not that two others did as well. The Enron audit committee may have been exactly what the stock exchanges had in mind in December, 1999, when they required that members demonstrate financial know-how--but the expertise may have been out of date following the changes Enron went through in the 1990s. In any case, it didn't help the committee make sense of Enron's tangled finances. The board of directors was not attentive to the nature of the off-books entities created by Enron, nor to their own obligations to monitor those entities once they were approved. The board did not pay attention to the employees because most directors in the United States do not consider this their responsibility. They consider themselves representatives of the...
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...more than convinced that is what I wanted to major in. Additionally I chose an accounting major because I love the challenge that comes with it. That involves actual understanding and applying what one has learned in deferring situation. Additionally, I like the feeling when one finds an error or a problem in a company book and can be able to resolve the issue with confidently. The most interesting thing about accounting major from my own perceptive is that it creates a platform to the most influential and high-ranking professional. The individual get to motivate, act a role models and also challenge the new comes in the industry (Akinmuyiwa, 2012). My ultimate job in the field of accounting is getting a vacancy with the Major Banks or the Big Four accounting firms from the country. That is when I will know I have achieved my dreams fully and also make a difference to the new upcoming accountants by motivating them. Over the previous ages, there has been a lot of debate and arguments whether accounting should get viewed as a form of regulation. The primary objective of accounting is to offer information on how to make well-informed economic decisions. The acquired information is utilized to justify the need of accounting rules or policies. However, at time these policies go beyond the information that is attained to make the decision. Hence, is the reason...
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...accounting profession has historically been dominated by a small number of large accounting firms. In fact, each of Japan’s four largest accounting firms is affiliated with one of the Big Four accounting firms that are principally domiciled in the United States. The overall role and nature of the independent audit function in the two major industrialized countries are also very similar. One of the major differences between the accounting profession in Japan and the United States is the relatively small number of Japanese CPAs. On a per capita basis, the United States has more than ten times as many CPAs as Japan. Likewise, there is a large disparity in audit fees between the two countries. The annual audit fee for a U.S. company is typically ten times the size of the audit fee for a comparable Japanese company. Finally, the nature and structure of the regulatory function for the accounting profession and financial reporting system have historically been very different between the two countries. Similar to the United States, Japanese auditors have faced mounting criticism in recent years as a result of a series of high profile accounting and auditing failures. Much of this criticism stemmed from revelations that several of the large “mega banks” that have dominated Japan’s post-World War II economy were technically insolvent despite the fact that those banks had received unqualified audit opinions each year on their financial statements. As a result of the major financial crises...
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...Assurance on sustainability reports: An International Comparison (1) Archival study ! global compustat I. Abstract Identify the factors associated with: Decision to voluntary purchase assurance The choice of the assurance provider A company needs to enhance credibility through assurance and choice of assurance provider will be a function of company, industry and country related factors. Findings: Companies seeking to enhance the credibility of their reports and build their corporate reputation are more likely to have their sustainability reports assured, although it doesn’t matter whether the assurance provider comes from the auditing profession. Companies domiciled in more stakeholder-oriented countries are more likely to choose a member of the auditing profession II. Introduction Purpose ! understand emerging assurance market and the role of assurance in establishing corporate credibility Why buy assurance? Increased stakeholder or user confidence in the quality of the sustainability information provided Increased stakeholder trust in the level of organizational commitment to sustainability agendas III. Literature review on voluntary assurance Why report? Informing stakeholders ! reducing information asymmetry Reporting also attests to organizational commitment, risk management, and a desire to build a corporate reputation Demand for assurance stems from the need to mitigate information asymmetry with institutional creditors. The auditing profession has well developed global...
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