ONE Trillion Dollars! ONE TRILLION Dollars! One TRILLION DOLLARS LOST BY AMERICAN INVESTORS and accounting firms give these companies a clean bill of health and why....Because Shrub's handed-picked SEC HeadKnocker Pitt lobbied to get the SEC off the backs of these crooks and he wanted a "kinder and gentler SEC".
And these loony RWEs on SI want to defend this crook!
"Wednesday July 10, 2:38 pm Eastern Time
Auditors Gave OK To 94% Of Companies With Accounting Woes - Study
By: Phil McCarty, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- The head of an independent ratings agency said public auditors "almost universally failed to warn of accounting irregularities."
Martin Weiss, chairman of Weiss Ratings Inc. in Palm Beach Gardens, Fla. , said his firm looked at auditors' performance from Jan. 1, 2001 , through June 30, 2002 , in warning the public of accounting problems and in warning of bankruptcies.
In his report released Wednesday, Weiss said auditors "gave a clean bill of health" to 94% of public companies he reviewed that were involved in accounting problems.
Weiss also found that auditors labeled as healthy 42% of companies that later filed for bankruptcy.
Weiss said in the report that a precise definition of accounting irregularities is hard to pin down, but that he used "major public sources," including problems cited in The Wall Street Journal, Multexinvestor.com and Bowman's Accounting Report.
"The first and most important line of defense for investors is manned by the nation's auditing firms; unfortunately, the accounting industry has overwhelmingly failed in its responsibility to deliver independent oversight to corporate financial statements," Weiss said.
The role of auditing firms in catching accounting irregularities is a matter of debate, as witnessed by testimony in the House Financial Services Committee hearings on WorldCom Inc. (NasdaqNM: WCOM - News) 's accounting. A narrower role of accountants is to make sure companies' statements conform to Generally Accepted Accounting Principles.
Weiss said he looked at 33 companies. Six auditing firms said 31 of the companies conformed to GAAP, while "going concern" warnings were issued on only two.
Among the 33 companies reviewed, Arthur Andersen LLP gave a "clean bill of health" to 11 companies it audited that were later involved in accounting problems, while failing to issue a going concern warning on any, the study indicated.
Deloitte & Touche and KPMG LLP each signed off on five companies later involved in accounting problems, also while failing to issue warnings.
PricewaterhouseCoopers issued going concern warnings on two of seven companies it audited that later ran into accounting troubles, the report said.
Ernst & Young LLP performed four audits on companies that later saw accounting problems, while Tullis Taylor conducted one audit that didn't warn investors of eventual accounting problems, the report noted.
Investors Estimated To Lose More Than $1 Trillion
As a result of these alleged accounting irregularities, Weiss estimated that investors suffered losses of up to $1.276 trillion because the 31 companies that were involved in accounting problems had a total peak market value of nearly $ 1.803 trillion when they were given the thumbs up from their auditors, but recently that market value fell to $527 billion.
"Although it is impossible to determine which portion of the losses are directly attributed to accounting issues, these issues clearly played a very important role," Weiss said.
Officials from Deloitte & Touche didn't immediately respond to a message seeking comment, while spokesmen from Arthur Andersen and PricewaterhouseCoopers declined to comment until their firms could review the study.
Bob Zeitlinger, a KPMG spokesman, said several of the companies audited by KPMG and cited by Weiss as having accounting problems are still in business and don't warrant a going concern warning, which is given to companies on the verge of bankruptcy.
He also said problems with Computer Associates International Inc. started before KPMG began working with it. Weiss cited the company's audit by KPMG in his study. |
