The Big Bailout of the Eurozone (Another crisis coming? - Seriously)

[Bogball XV]

If auditors can't 'find' evidence (even when they're not looking for it) of mismanagement on the Anglo scale, then either: (a) Anglo were masters of deceit, or (b) they're not doing their job adequately.  If (a) is true, and the auditors can be codded, is there a point to the 'audit' at all?

to answer your last question, imo audits of companies of this size serve little or no purpose and certainly add very little in terms of value - the staff conducting the audits frequently don't understand exactly what they're supposed to be doing or the systems in place within the company they're auditing, how could they really be expected to?  They don't have the time to do the job that the public expect them to have done, internal auditors addmore value, but one has to be concerned as to their independence.

[passedit]

have any of the auditor bashers heard of "the expectation's gap"?

http://www.abrema.net/abrema/expect_gap_g.html

yeah and the auditor is a watchdog, not a bloodhound etc etc etc - still loans of €127M out of a total loan book of 60Bn would be expected to be identified, especially when they're being moved in and out in the same fashion for 6/7 years in a row - what do they call that again - Window Dressing??

Some would call it fraud.

[Hound]

If auditors can't 'find' evidence (even when they're not looking for it) of mismanagement on the Anglo scale, then either: (a) Anglo were masters of deceit, or (b) they're not doing their job adequately.  If (a) is true, and the auditors can be codded, is there a point to the 'audit' at all?

Indeed Billy, i'd expect a layman never mind an experienced auditor to spot 82m dissappearing then reappearing annually. I'd be interested to see what the revenue commissioners eventually make of these loans.

But did I not read that the only disclosure that had to go into the accounts was the balance at the end of the year - which was properly disclosed. So the letter of the law was not breached?

There is nothing wrong or illegal with a company (more especially a bank) granting loans to employees or directors. Of course if what I said in the 1st paragraph is correct, then the law is an ass by not insisting on the average balance for the year being disclosed rather than the closing balance.

Presuming Seanie was getting a preferential rate of interest, then that benefit would be subject to tax. I'd be surprised if he didn't disclose that to Revenue, but if he didn't I'm sure they'll go after him.

[passedit]

If auditors can't 'find' evidence (even when they're not looking for it) of mismanagement on the Anglo scale, then either: (a) Anglo were masters of deceit, or (b) they're not doing their job adequately.  If (a) is true, and the auditors can be codded, is there a point to the 'audit' at all?

Indeed Billy, i'd expect a layman never mind an experienced auditor to spot 82m dissappearing then reappearing annually. I'd be interested to see what the revenue commissioners eventually make of these loans.

But did I not read that the only disclosure that had to go into the accounts was the balance at the end of the year - which was properly disclosed. So the letter of the law was not breached?

There is nothing wrong or illegal with a company (more especially a bank) granting loans to employees or directors. Of course if what I said in the 1st paragraph is correct, then the law is an ass by not insisting on the average balance for the year being disclosed rather than the closing balance.

Presuming Seanie was getting a preferential rate of interest, then that benefit would be subject to tax. I'd be surprised if he didn't disclose that to Revenue, but if he didn't I'm sure they'll go after him.

There is a strong arguement to be made that the balance remained outstanding at the year end as the transactions in and out were artificial, as their only purpose was to hide the loan, and should be disregarded.

[bingobus]

If auditors can't 'find' evidence (even when they're not looking for it) of mismanagement on the Anglo scale, then either: (a) Anglo were masters of deceit, or (b) they're not doing their job adequately.  If (a) is true, and the auditors can be codded, is there a point to the 'audit' at all?

Indeed Billy, i'd expect a layman never mind an experienced auditor to spot 82m dissappearing then reappearing annually. I'd be interested to see what the revenue commissioners eventually make of these loans.

But did I not read that the only disclosure that had to go into the accounts was the balance at the end of the year - which was properly disclosed. So the letter of the law was not breached?

There is nothing wrong or illegal with a company (more especially a bank) granting loans to employees or directors. Of course if what I said in the 1st paragraph is correct, then the law is an ass by not insisting on the average balance for the year being disclosed rather than the closing balance.

Presuming Seanie was getting a preferential rate of interest, then that benefit would be subject to tax. I'd be surprised if he didn't disclose that to Revenue, but if he didn't I'm sure they'll go after him.

Regarding a Directors loan, the opening and closing  balance should be disclosed as well the maxiumun balance in the year. The accumulative Directors loan should also be stated as a % of Net Assets, as a Directors loan greater than 10% of Net Assets is a breach of Company law and is a reportable offence ( to ODCE )

[Hardy]

A more pertinent question might be why the behaviour of a bank chairman, no less, that single-handedly stands to cost the taxpayer hundreds of millions in additional interest payments because of the damaged reputation of our system is technically not even illegal.

That auditors' charter is bordering on funny, if predictable. In common with all conspiracies against the people perpetrated by the professions, effectively it says "we're very happy to charge huge fees for checking out the accounts of registered companies on behalf of the shareholders and public, but of course we're not taking any of the responsibility that might reasonably be expected to accompany such generous fees. Are you mad, old chap?".

Terms and conditions apply.

[bcarrier]

Ill be shocked if E&Y dont have a letter of rep from Fitzpatrick that corresponds with the note in the accounts. The whole window dressing transaction was intended to deceive and info has probably been withheld from E&Y. Time will tell.

There seems to have been a private company culture at anglo ....the placing of Quinns shares/CFDs  looks most unusual and is possibly an illegal share support scheme.

[Rois]

That auditors' charter is bordering on funny, if predictable. In common with all conspiracies against the people perpetrated by the professions, effectively it says "we're very happy to charge huge fees for checking out the accounts of registered companies on behalf of the shareholders and public, but of course we're not taking any of the responsibility that might reasonably be expected to accompany such generous fees. Are you mad, old chap?".

Terms and conditions apply.

Auditors can only check the information that is made available.  If, through their investigations, they identify anomalies between the information provided to support the accounts and the accounts themselves, great.  If they have been negligent and not identified anomalies that could be picked up by another firm carrying out the same work, by all means call them to account.  Of course they can be made to assume liability for such mistakes, proportionate to the loss incurred.

But they do not prepare the accounts or prepare the supporting information.  They verify.  Check.  Audit, if you will.  While third party evidence is generally the most reliable, this is a case of internal UNDISCLOSED loans. 

Should internal systems be in place to detect these - certainly.

Are these controls the responsibility of the external auditor - no.

I would love to know how much you think these huge fees are in the grand scale of the bank's assets and liabilities. 

[Declan]

Rois maybe I am letting my emotions get the better of me but my reference to the business classes is related to the constant message from people involved in the Financial Services industry telling us of the need for cutbacks etc when they are the very people who caused the situation in the first place. I bow to your superior professional knowledge and know that the external auditors can only verify what is put in front of them but if a loan is on the books at one stage of the year and then not in the end of year balance sheet I'd have thought it may raise some questions in their minds - but that's a simple layman's view of the world. My respect for that profession took a huge hit with the Enron etc scandals and the percption amongst the chattering classes is certainly that they are all part of the golden circle

[passedit]

Rois maybe I am letting my emotions get the better of me but my reference to the business classes is related to the constant message from people involved in the Financial Services industry telling us of the need for cutbacks etc when they are the very people who caused the situation in the first place. I bow to your superior professional knowledge and know that the external auditors can only verify what is put in front of them but if a loan is on the books at one stage of the year and then not in the end of year balance sheet I'd have thought it may raise some questions in their minds - but that's a simple layman's view of the world. My respect for that profession took a huge hit with the Enron etc scandals and the percption amongst the chattering classes is certainly that they are all part of the golden circle

As a former Big 5 employee myself Declan (albeit in tax rather than auditing) I saw more than enough to concur with your opinion. Audits, while lucrative are merely a means of keeping a foot in the door so that the real money can be made with consultancies (tax evasion avoidance, financial planning etc). human nature being what it is, the hand that feeds is seldom bitten.

[Hound]

Rois maybe I am letting my emotions get the better of me but my reference to the business classes is related to the constant message from people involved in the Financial Services industry telling us of the need for cutbacks etc when they are the very people who caused the situation in the first place. I bow to your superior professional knowledge and know that the external auditors can only verify what is put in front of them but if a loan is on the books at one stage of the year and then not in the end of year balance sheet I'd have thought it may raise some questions in their minds - but that's a simple layman's view of the world. My respect for that profession took a huge hit with the Enron etc scandals and the percption amongst the chattering classes is certainly that they are all part of the golden circle

As a former Big 5 employee myself Declan (albeit in tax rather than auditing) I saw more than enough to concur with your opinion. Audits, while lucrative are merely a means of keeping a foot in the door so that the real money can be made with consultancies (tax evasion avoidance, financial planning etc). human nature being what it is, the hand that feeds is seldom bitten.

There's a huge difference between evasion and avoidance, despite what some in the media might say. Very surprised that someone who worked in tax in the Big 4 would put the two together like that. In Dublin anyway, nobody in the Big 4 will countenance any client who wants to evade tax.

[passedit]

Now hound, I'm well aware of the difference in law (if not in morality) and that was just my wee dig.

Btw me using the term big 5 shows how long ago it was. 

[bingobus]

Rois maybe I am letting my emotions get the better of me but my reference to the business classes is related to the constant message from people involved in the Financial Services industry telling us of the need for cutbacks etc when they are the very people who caused the situation in the first place. I bow to your superior professional knowledge and know that the external auditors can only verify what is put in front of them but if a loan is on the books at one stage of the year and then not in the end of year balance sheet I'd have thought it may raise some questions in their minds - but that's a simple layman's view of the world. My respect for that profession took a huge hit with the Enron etc scandals and the percption amongst the chattering classes is certainly that they are all part of the golden circle

As a former Big 5 employee myself Declan (albeit in tax rather than auditing) I saw more than enough to concur with your opinion. Audits, while lucrative are merely a means of keeping a foot in the door so that the real money can be made with consultancies (tax evasion avoidance, financial planning etc). human nature being what it is, the hand that feeds is seldom bitten.

Same background, Big 5 but in Auditing. The Audit was always considered the Bread and butter with all the other area's considered the money earners. Would be surprised if the Audit team hadn't picked up in it but you'd have to question the directors motives and lenghts they went to hide it. Was it even in his name or a holding company name? If so, it could easily slipped the net. Alot of the audit work at that size of a company would be testing of controls etc and the actual detailed testing would be samples but on a small scale in thousands & thousands of transactions. Computer aided sampling may have used to identify material transactions but if he kept the transactions at certain levels, they could easily have slipped the net.

If they where in his name though, their is no excuse for missing them, other than a blind eye been turned.

[Declan]

Here's how were going to get out of it all according to our great leader

http://www.ireland.com/home/Full_text_Taoiseachs_statement_to_Dil/maxiview.ie?mx_fast_NEWS_irishtimes.com_uuid=223463_irnewsirishtimes

[bingobus]

Here's how were going to get out of it all according to our great leader

http://www.ireland.com/home/Full_text_Taoiseachs_statement_to_Dil/maxiview.ie?mx_fast_NEWS_irishtimes.com_uuid=223463_irnewsirishtimes

Absolute cop out, cost cutting in vague areas won't satisfy anyone that Ireland is addressing its economy. Our credit rating will drop after this.
We'd get more leadership from Pat Kenny.