Industry news roundup: week ended 30 Jan 2014:
This week, the US has slapped down the Chinese units of 4 major accountants – while the UK gets a former banking exec as chair of the FRC.
It seems odd to have the former chairman of Lloyds tapped to head up the Financial Reporting Council for the next three years, doesn’t it? I mean Lloyds has been in some hot water lately considering how the bungled Lloyds branch sale to the Co-operative Bank has generated so much furore. In fact, even though Sir Win Bischoff will be overseeing the FRC as it actually investigates the whole matter apparently there’s no conflict of interest here – despite the fact that Sir Win was at the helm of Lloyds during the whole debacle.
In all honesty it’s a fantastic gig for the 72 year old former Lloyds executive, what with the massive £120,000 per annum salary for about 16 hours a week of work. That’s what, about £144 an hour? Not bad work if you can get it. I wonder what Sir Win will do the rest of the week? Count his money perhaps – though I’m sure he won’t have an account with the Co-op considering how the deal was called off after it was discovered that 1.5 billion was simply missing from the mutual’s accounting books. Well, good luck to the FRC looking into the matter!
Meanwhile, across the pond a Federal judge has slapped down the Chinese branches of four large accounting firms, banning them from auditing any publicly traded firm in the United States. We’re not talking about fly-by-night accountants either, as these are the Big Four – Ernst & Young, KPMG, Deloitte, and PwC.
The row started after it was revealed that all four had been neglecting to publicise auditing data on US-listed companies that were based in China, a fact that the judge decided was a willful violation of Federal law. For the moment these four accounting giants will be permitted to continue operating in the US as they go through the appeal process.
I don’t know how much of this is just political posturing, though. We all know how the US and China have a love-hate relationship, especially since the Asian powerhouse has a habit of supporting bizarre regimes such as North Korea. Still, this could have some serious repercussions if the ruling is upheld on appeal, especially if it strains international relationships between the two superpowers.