Big Four Defend Audit Companies’ Role in Economic Crisis
Executives from the Big Four accounting firms Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers said audit companies are never to blame for not sounding the alarm when the banking sector was in the verge of falling down.
The Big Four argued it was beyond their business to do assessment in failing companies after the House of Lords Economics Affairs Committee questioned the role of audit companies during the financial crisis.
The Lords asked the auditors why they signed off the banks as a ‘going concern.’ Deloitte senior partner and chief executive John Connolly said the decision of signing off a bank’s accounts as a ‘going concern’ was made on grounds that the government would offer its support if this was not going to be the case.
Connolly said that there would have been a different assessment if the audit companies have found out that there would not be a support from the government.
However, Lord Lawson expressed his astonishment at the idea that there was no need for the audit companies to sound the alarm about it knowing that there would be support from the taxpayers.
KPMG senior partner John Griffith-Jones said that the basic role of an auditor is to “count the score at the end of the accounting period.”
Even independent inspectors into the economic crisis said the audit companies’ reports were of high quality, Connolly noted.
He added that if the audits were found to be faulty, they would always be ready to restate the financial statements.
The inquiry by the Lords into the role of audit companies in the financial crisis is expected to culminate before the year ends.