Company Xerox, branded box which just has not changed in 1996, the fate of the presidential elections in Russia, again «framed». At this time, no campaign, and the company, and in a much more literal sense. Yes, and all the «Big Five» the largest companies, auditors, actually declined since the collapse of Andersen Worldwide to the "Big Four", was actually under attack. The Federal Commission on Securities USA (SEC) filed a lawsuit against the firm KPMG, accusing it of covering «inappropriate» Action Corporation Xerox.
SEC v. KPMG opened an investigation last spring, after a wave of scandals to «corporate accounting» overtook one of the largest manufacturers of copying equipment. Xerox, an investigation in respect of which was already in 2000, charged that for several years, she regularly inflated its profits, thereby deceiving investors. In particular, under «the proceeds from sales» were actually profit from the leasing contract, the amount that should have come to the balance gradually, in fact, there were recorded with a significant advance. As a result, say, the company president himself from 1997 «unnecessary» 6,4 billion in Xerox initially with this assessment did not agree, arguing that no pripisok was not just there «differences in interpretations of accounting», and disputed amount is much less - about $ 2 billion
However, SEC was able to coerce kopirovalschikov to the pre-trial deal and accept the fine of $ 10 million - the most stringent punishment in cases of this kind in America. KPMG and its partners, Michael Conway (Michael Conway), conducted the audit of Xerox recent years, continued to stand on her: the company was reporting in accordance with GAAP. Some actually took place is doubtful points raised in the auditor reputation management Xerox, and in general, "doing everything to protect the interests of investors." Xerox is going to deal with the SEC is not for the truth, but because the Commission's investigation led to a serious drop in the shares of the company and difficult to obtain new loans. To confirm the correctness KPMG required to appoint a new auditor «copying» company, and it was soon appointed - PricewaterhouseCoopers. However, the results of this new Xerox audit have not been too favorable to her traditional auditor.
However, many analysts and market participants of audit services to emphasize that the primary cause of the scandal surrounding Xerox and its audited the company was not someone else's bad faith, and flaws of the legislation leaves too much room for free interpretation. In fact, profits «Multiple» company itself has been attributed - published earnings were real, but about their «lengthiness» in time, you can argue and argue. However, not only to Xerox, and KPMG has been under threat of a large number of lawsuits by participants in the stock market, saying, deceived distorted data records. The decision of the court, indeed, can be fatal to the auditor. In addition, it can have an impact on the entire world market of audit and consulting services. More recently, this market was one of the most successful developing countries.
U «Big Five» (PricewaterhouseCoopers, Deloitte & Touche, KPMG, Ernst & Young and Andersen Worldwide) annual growth in sales of services were 15-18%, which far outpaced growth in other sectors. The total amount of revenue in 2000 alone from the audit services in the world amounted to about 85 billion dollars, and consulting services in the sector reached 100 billion U.S. «Big Five» had total sales of 80 billion dollars and the state in half a million people. Scandal with Andersen in the United States has led not only to the redistribution of property and making the «five» in the «Quartet», but also to the overall growth of distrust to the audience. In summer, the court of Pennsylvania has filed a civil suit against Deloitte & Touche on the charge of excessive amounts of insurance documents bankrupt insurance company Reliance Insurance for $ 1 billion in Russia for two years rage of passion, on the basis of audit «Gazprom» and several other giants of the domestic business.
In the changed environment of all the major auditing and consulting firms are forced to move to restructure its business, dividing its activities and in some cases, reducing the bloated staff. Of course, their leaders say that the wave of mistrust, sooner or later, will take place and for their companies over a period of prosperity. The whole question is: when? In fact, the situation in this market, in addition to subjective factors, is a consequence of the general crisis of consumer demand. In the difficult situation of air carriers, Internet companies, carmakers. Even tobacco companies are still considered to be profitable, must gradually acquire non-core assets in order to avoid possible destruction in the light of billion of claims «on harm of health». In this situation, many are forced to do «good mine with a bad game», blowing their own profit. Determine what methods that are used - legitimate or not, is difficult for auditors, as well as controlling bodies like the SEC. On the one hand, laws and applicable accounting standards can be interpreted in different ways, including those in favor of «inflated» company. On the other - obzhegshiesya on shares, investors often require the active «blood» guilty, I do not mention the intrigues of competitors. The judiciary is also not easy to be choice, but to do it sooner or later have to.