Semi-Daily Journal

Deloite & Touche gone queer, too, eh? Maybe the
IRS should take over.

Bush & crony capitalism, the wimpering end of capitalist created American civ?

This is the terrible Bush crap the critics should focus on, NOT the Iraq (mostly good) stuff.

Bush crap & crony capitalism?? What ARE you talking about??

Wow, 21 minutes before someone blamed this on Bush! I think that this is a new record of charitability toward him on these boards. It's a little chilly in Chicago this morning; can we find a way to blame THAT on him too while we're at it?

In defense of Deloitte (where I used to work) they actually seem to care about ethical issues, unlike Andersen (where I also used to work). I refused to march in the rain to support Andersen because it actually deserved to go under, and I knew that it was doomed the minute that Jesse Jackson showed up in the lobby.

The one thing that I fear about only having four big accounting firms is that the "death penalty" is no longer much of an option in the prosecutor's toolbox. It isn't obvious what public policy changes there should be in this situation, apart from maybe some good international accounting standards. Even then I don't trust accountants; they managed to even make a hash out of counting stock options as a liability. And even if you try to run an ethical accounting firm, how do you manage a hundred thousand unruly people?

Chris has a point (and is also a braver man than I!). The accounting biz was a time-bomb waiting to happen. There are basically five major accounting partnerships (there used to be six, under Andersen hit the fan)-partnerships, because unlike firms, partnerships DON'T have to disclose information that firms are legally required to. The Big Five handle the books for nearly all major businesses-494 of the Fortune 500. We're talking hundreds of thousands of accountants, all trying to make the client happy and get the bonus/promotion. Corners are bound to be cut, and rules are bound to be broken.

I truly detest Bush (and his GOP string-pullers) but they are not to blame here. The system was dysfunctional from a long time back, and bound to fail-and fail spectacularly-sooner or later.

Personally, I'm surprised it took this long!

I blame it on Reagan, who gutted the SEC, m'self.

Haha, wouldn't it be funny if thousands, or tens of thousands, or even more people's jobs were hosed because of that massive fraud?

I'm glad people like Ken Lay still have 100s of million of dollars. It makes me feel like I can sing out "The System Works!"

Where were the regulators? Where was the SEC? Why does it appear the Attorney General Eliot Spitzer is the sole reason the SEC ever acts these days.

A friend pointed out that AARP mutual funds charge investors between 4 and 15 times more for funds than Vanguard. What is going on?

The misfortunes of Parmalat, a Brazilian company that does not trade in the US, probably should not be blamed on the SEC.

It looks like someone stole the milk money.

The misfortunes of Parmalat, a Brazilian company that does not trade in the US, probably should not be blamed on the SEC.

The misfortunes of Parmalat, a Brazilian company that does not trade in the US, probably should not be blamed on the SEC.

The misfortunes of Parmalat, a Brazilian company that does not trade in the US, probably should not be blamed on the SEC.

"Haha, wouldn't it be funny if thousands, or tens of thousands, or even more people's jobs were hosed because of that massive fraud?

I'm glad people like Ken Lay still have 100s of million of dollars. It makes me feel like I can sing out "The System Works!""

Only objectively pro-islamofascist Saddamite idiotarians would make fun of Mr. Lay. Ashcroft, the God-Annointed Right Arm (GARA) of Our Dear Leader, would have struck Mr. Lay back in 2001, IF there had been any crimes committed by him. That's just simple logic, proceeding from the fact that Our Deal Leader is infallible.

The fact that GARA Ashcroft has sent FBI agents to bust hookers in New Orleans, and Medical Marijuana clubs in California, instead, is **proof** that Lay is, in fact, as innocent as a lamb.

All the proof that a **Real American** needs, that is.

Actually, **Real** Real Americans don't need proof - 'proof' is actually a creation of Evul Librul PC Evolutionsymp leftists.

____

The misfortunes of Parmalat, a Brazilian company that does not trade in the US, probably should not be blamed on the SEC.

Posted by Charles Kibote at December 19, 2003 11:59 AM

Parmalat is an Italian company -- Parma as in prosciutto di Parma. (The scandal as I understand it involves Parmalat subsidiaries in Brazil, among other places.)

Of course, this doesn't change the degree of blameworthiness (or lack thereof) of the SEC. To the extent the SEC has some indirect culpability, it would be in that they and/or the IRS have had ample cause to boil in oil the remaining big-however-many-it-is-these-days accounting firms, but haven't.

This is an example of not that the problem is a US problem, but a problem anywhere. People do unethical things when they've made bad decisions.

I don't understand how this could happen the way they say it did. This isn't as complex as what Enron was doing. Standard auditing procedures are to send a letter to the bank confirming the amount on account. I have never been on an audit where we didn't do this. They did either of the following it seems to me:
1)Accepted a document from the client.
2)Parmalat had someone on the inside at BOA.
3)Parmalat had 3.95bn and BOA lost it.

Just trying to add some real info versus patently false accusations.

Just a small correction to Stew's comment. There are now four major accounting firms after Andersen went down, not five, and they are collectively known as the "Big Four." We'll see how long it takes before it becomes "Big Three." There used to be six until the PW and C & L merger.

Also, his claim that they don't have to disclose information is only partially true. True, they don't have to disclose because they are partnerships, but not because they are not "firms" but because they are not publicly traded companies.

Sorry - I know this information is trivial but as an accountant, I have anal tendencies.

Just a small correction to Stew's comment. There are now four major accounting firms after Andersen went down, not five, and they are collectively known as the "Big Four." We'll see how long it takes before it becomes "Big Three." There used to be six until the PW and C & L merger.

Also, his claim that they don't have to disclose information is only partially true. True, they don't have to disclose because they are partnerships, but not because they are not "firms" but because they are not publicly traded companies.

Sorry - I know this information is trivial but as an accountant, I have anal tendencies.

Just a small correction to Stew's comment. There are now four major accounting firms after Andersen went down, not five, and they are collectively known as the "Big Four." We'll see how long it takes before it becomes "Big Three." There used to be six until the PW and C & L merger.

Also, his claim that they don't have to disclose information is only partially true. True, they don't have to disclose because they are partnerships, but not because they are not "firms" but because they are not publicly traded companies.

Sorry - I know this information is trivial but as an accountant, I have anal tendencies.

"Wow, 21 minutes before someone blamed this on Bush! I think that this is a new record of charitability toward him on these boards."

Well, it's not an American company. ;-)

But Republican evil stretches far around the globe, in all four dimensions -- I hear new evidence pins the American Express Salad Oil Scandal on Dubya's cronies too.

There would be probably much less fraud of this kind under shareholder vigilance with more widespread collective ownership of capital.

By the way how come people are not talking about direct democracy applications to assist shareholder vigilance? Or are they already?

Let's see. In 1997, PW merges with C&L, while KPMG flirts with E&Y. One merger goes through and the other does not. Then AA falls apart with the pieces being picked up by the other "Four". I had thought the Grant Thorntons and BDO Seidmans would rise to the occassion. But read the details here. It's not just D&T but it's also Grant Thornton whose name is being dragged into this. I sense some finger pointing going on, which quite frankly will not put a single penny back into the pockets of the shareholders. Ahem.

http://www.nytimes.com/2003/12/19/business/19CND-PARMA.html

Parmalat on Edge as Bank Says It Doesn't Have $4.9 Billion
By JOHN TAGLIABUE

PARMA, Italy — Parmalat, the dairy giant in this central Italian city that has shaken investors recently, appeared to be edging toward insolvency today after the Bank of America said an account holding 3.9 billion euros, or about $4.9 billion, that the company claimed to have did not exist.

The company said that Enrico Bondi, a specialist in corporate turnarounds who was installed on Monday as chairman and chief executive, would convene a board meeting after financial markets closed this evening and release a statement. There was no indication of what the board would decide, though reports were rife that Mr. Bondi, who replaced Calisto Tanzi, Parmalat's founder and majority shareholder, might resign.

The Milan stock exchange barred Parmalat shares from trading for most of the day, after they fell more than the permitted 10 percent on Thursday over continued concern about Parmalat's future. But investors punished Parmalat bonds, pushing them down to as low as 25 percent of face value from about 45 percent. Parmalat almost defaulted on 150 million euros of bonds that matured last week, making the payment four days late.

Bankruptcy seemed almost unavoidable after Standard & Poor's, the rating agency, cut Parmalat's credit rating two levels, to D, from CC, indication default. The action came as a result of Parmalat's inability to pay $400 million to buy out shareholders in its Brazilian subsidiary on Wednesday. The subsidiary, Parmalat Brasil, informed its suppliers in a letter that it could not pay bills due earlier this month, according to reports in Italian newspapers.

The flurry of cascading events was set in motion after Italy's stock market regulators were informed late Thursday of a statement by Bank of America to the effect that documents claiming that Parmalat had the equivalent of $4.9 billion in an account at the end of last year were not authentic. The bank was responding to inquiries by Grant Thornton, the auditor for Bonlat, a Parmalat finance company based in the Cayman Islands....

Charles Kibote, are you related to Charles Kimbote, the author of the brilliant literary criticism that accompianies "Pale Fire?"

It's really an amazing scam. Just claiming non-existent assets... wow!

I wanna declare myself a multi-billionaire!

Julian:

I agree this is truly amazing. Enron was over timing of revenue and expenses, which got a little complex, just like trying to read through the accounting gimmicks of Mitch Daniels & Co. Worldcom had to go with whether an entry was an expense or a liability. But just plain making up something as transparent as cash? Now that's an art form - sadly. Even Mitch Daniels couldn't pull that off!

grant thornton seems to be in the clear, at least they checked on the alleged funds.

Big Al:

I'm not sure why your think Grant Thornton is in the clear. Read the 10-K for Enron for the fiscal year ending 12/31/2000. Andersen checked on a lot of things. But merely checking is not really an effective audit by any means. To be fair, I have no clue as to who did what here - yet. But bet the following - there will be some hard questions for the auditors. And if their only response is "we checked", the questions will continue.

I suppose, to be fair, this is the audit process working, though perhaps it is late. I stand corrected.

This is most disconcerting. I am addicted to using their chopped tomatoes, supply of which is less than reliable now. What will I do if they go bankrupt?

Italy, of course, is also ruled by a corporatist, Berlusconi, who also has had his adventures with virtual assets
http://www.luciomanisco.com/crisi/testi/berlusc_spazzatura_en.htm
and has decided that accounting fraud is not criminal
http://wwhttp://www.globalpolicy.org/nations/launder/regions/2001/0809ital.htm
and is George Bush's good buddy
http://it.news.yahoo.com/031113/201/2iyqu.html

You couldn't make it up if you tried.

"Il Sole 24 Ore, an Italian financial newspaper, that " maybe it's helpfull to know that il sole 24 ore isn't a but t h e financial newspaper, owned by confindustria, an organization the represents the whole of Italy's industries and services companies. Mr.Tanzi, 51% owner of Parmalat, is or was on it's board.

I'm sure it is entirely coincidental, but the Italian operation of Andersen was absorbed by Deloitte's Italian operation after Andersen went belly up.

Andersen in Italy to Merge with Deloitte & Touche

by Zini & Associates - Published in Legal Media Group - 12 May 2002

On April 23 2002 the Italian branch of Andersen has announced plans to merge with Deloitte & Touche Italia.
The two combined companies will have approximately 3,500 employees and estimated total revenues close to €400 million. Deloitte & Touche Italia has considerable experience in the field of telecommunications and mass media (auditing companies such as Mediaset, Rai, Omnitel and Tiscali), while Arthur Andersen Italia specializes in banking and asset management, with key customers that include Banca Intesa, Unicredito, San Paolo Imi, Banca Montepaschi, and Banca Popolare di Verona.

In the meantime, Andersen's international offices continue to move quickly to forge deals with units of rival auditing and consulting firms, such as Ernst & Young and Deloitte Touche. An offer to acquire the entire operations of Andersen by KPMG, once thought possible, fell apart earlier this month.
Andersen's British, Belgian, Swedish, Danish and Spanish branches have also agreed to merge with Deloitte & Touche, and the Polish, Russian, French and German units look set to merge with Ernst & Young.

One more small reminder that the audit system -- whereby companies pay their own auditors, and auditors disdain all responsibility, saying that they are only reporting what the auditee told them -- is ridiculous on its face.

I didn't mean to say Pres. Bush was personally responsible for this particular corporate thieving kind of thing; and yes, Bush, Clinton, Bush, and Reagan were all somewhat to blame. Elsewhere I note that laws AGAINST corporate raiders (greedy folk getting rich by firing other, less shareholder friendly greedy folk) are partly to blame.

A lot of the current management game is how much can the managers get, from the employees, the shareholders, the customers? How much can they get for themselves? Plus, everything's OK as long as they don't get caught.

The point is to focus more Bush criticism on lousy corporate governance, and needed reforms there, and less on Iraq.

PARMALAT & GRANT THORNTON.
4BILLION EUROs is too large and too important a figure on the balance sheet for any auditor to overlook. It seems to me that Grant Thornton (GT) either:
1. Checked and found that the cash did exist and was held in the Bank of America (BoA) at the at audit date. If so then it had to be subsequently withdrawn and the questioned document entered into the accounts to cover. In this case then GT would seem to be in the clear having discovered the ‘discrepancy’.
Alternatively…
2. They did not check it’s authenticity but took the document at face value. In that case they should be held responsible

An article on the web http://www.cfo.com/article/1,5309,10713||A|93|100,00.html indicates that GT denied the IRS access to the names of clients holding cash in Offshore Tax shelters. Clearly GT is experienced in offshore tax operations. They must know how easily money is moved in and out.

I understand the problem crystallised when the BoA told GT that the document, which purported to certify the existence these funds, was false. I have not yet seen whether anybody has asked BoA to confirm if these funds were ever held by them. Has anyone asked them? If so, when were they removed, to where and by whom?

If GT based their audit on the acceptance of a false certificate with no check of its’ authenticity, it would be difficult for a reasonable person to accept that the failure to check such a crucial element of the balance sheet could be mere negligence. [Surveyors first check the foundations of a building.]

Have any complaints been made in recent times against Grant Thornton over the failure to highlight funds missing from balance sheets? The following article suggests that they did have problems in the 80s and the 90s http://free.financialmail.co.za/report/grant03/agrant.htm. Who knows what those problems were? They say they learned their lessons. What lessons did they learn?

Finally I too would be intrigued to know why Grant Thornton and HLB Kidsons called off their proposed merger in February 2001. http://www.browneyedsheep.com/accountancyUKind.htm

PARMALAT & GRANT THORNTON.
4BILLION EUROs is too large and too important a figure on the balance sheet for any auditor to overlook. It seems to me that Grant Thornton (GT) either:
1. Checked and found that the cash did exist and was held in the Bank of America (BoA) at the at audit date. If so then it had to be subsequently withdrawn and the questioned document entered into the accounts to cover. In this case then GT would seem to be in the clear having discovered the ‘discrepancy’.
Alternatively…
2. They did not check it’s authenticity but took the document at face value. In that case they should be held responsible

An article on the web http://www.cfo.com/article/1,5309,10713||A|93|100,00.html indicates that GT denied the IRS access to the names of clients holding cash in Offshore Tax shelters. Clearly GT is experienced in offshore tax operations. They must know how easily money is moved in and out.

I understand the problem crystallised when the BoA told GT that the document, which purported to certify the existence these funds, was false. I have not yet seen whether anybody has asked BoA to confirm if these funds were ever held by them. Has anyone asked them? If so, when were they removed, to where and by whom?

If GT based their audit on the acceptance of a false certificate with no check of its’ authenticity, it would be difficult for a reasonable person to accept that the failure to check such a crucial element of the balance sheet could be mere negligence. [Surveyors first check the foundations of a building.]

Have any complaints been made in recent times against Grant Thornton over the failure to highlight funds missing from balance sheets? The following article suggests that they did have problems in the 80s and the 90s http://free.financialmail.co.za/report/grant03/agrant.htm. Who knows what those problems were? They say they learned their lessons. What lessons did they learn?

Finally I too would be intrigued to know why Grant Thornton and HLB Kidsons called off their proposed merger in February 2001. http://www.browneyedsheep.com/accountancyUKind.htm

PARMALAT & GRANT THORNTON.
4BILLION EUROs is too large and too important a figure on the balance sheet for any auditor to overlook. It seems to me that Grant Thornton (GT) either:
1. Checked and found that the cash did exist and was held in the Bank of America (BoA) at the at audit date. If so then it had to be subsequently withdrawn and the questioned document entered into the accounts to cover. In this case then GT would seem to be in the clear having discovered the ‘discrepancy’.
Alternatively…
2. They did not check it’s authenticity but took the document at face value. In that case they should be held responsible

An article on the web http://www.cfo.com/article/1,5309,10713||A|93|100,00.html indicates that GT denied the IRS access to the names of clients holding cash in Offshore Tax shelters. Clearly GT is experienced in offshore tax operations. They must know how easily money is moved in and out.

I understand the problem crystallised when the BoA told GT that the document, which purported to certify the existence these funds, was false. I have not yet seen whether anybody has asked BoA to confirm if these funds were ever held by them. Has anyone asked them? If so, when were they removed, to where and by whom?

If GT based their audit on the acceptance of a false certificate with no check of its’ authenticity, it would be difficult for a reasonable person to accept that the failure to check such a crucial element of the balance sheet could be mere negligence. [Surveyors first check the foundations of a building.]

Have any complaints been made in recent times against Grant Thornton over the failure to highlight funds missing from balance sheets? The following article suggests that they did have problems in the 80s and the 90s http://free.financialmail.co.za/report/grant03/agrant.htm. Who knows what those problems were? They say they learned their lessons. What lessons did they learn?

Finally I too would be intrigued to know why in February 2001 did Grant Thornton and HLB Kidsons call off their proposed merger. http://www.browneyedsheep.com/accountancyUKind.htm.