Following on from Tuesday’s post, let’s talk BIG BRAND.
We attach ourselves to brands because we believe in them, and because they make statements about our business, our status. There are four major accounting and audit companies in the world. Their brands project status and professionalism, and as such major companies and investors trust them and engage them to audit their accounts.
Bill & Ben The Audit Men do not tend to feature in the finances of major companies. People rightly ponder: Who is Bill, who is Ben, and what is their brand? What happens when a big brand goes bad? Trust evaporates and businesses fail.
Trust matters. In the case of Amjad Rihan versus EY Global and others, a question of trust has arisen. The judge has accused EY of lending its brand to a misleading assurance report about its client. Indeed, within the judgment there is reference to an internal EY email that states, “there is an undercurrent of them looking to use EY’s brand for their advantage …”
The report was relied upon by parties, including the local Dubai commodities regulator, the London Bullion Market Association, investors, investigators, the public, the accountancy profession, those who regulate accountants, and EY (especially EY, as the report carries its brand). This is one tributary of multiple trust supply chains that attach to EY and now, by extension, this report and case.
As professional accountants, Rihan, EY, and its global executive managers are bound by the standards of ethical conduct of the International Federation of Accountants Code (IFAC), which “requires compliance with the fundamental principles of integrity, objectivity, professional competence and due care.” More specifically, the Code asserts, “The principles of integrity includes an obligation not to be knowingly … associated with reports … where the professional accountant believes that the information (a) contains a materially false or misleading statement; or … (c) omits or obscures information … where such … would be misleading.”
EY carries the brand of the International Federation of Accountants. The judge accused the most senior EY witness, Mark Otty, the firm’s global emerging markets deputy chair, of having never read the IFAC. The judge described “his … evidence as calculating and given in search of legal advantage, without regard for objective truth or accurate recollection” and later added EY “compromised their integrity, objectivity and professionalism.”
Thus, who else, and what else, has been compromised, and whose brand has been adversely impacted by this misleading report? Let me give you some food for thought: EY was the auditor for Danske Bank; both the bank and EY are the subject of an ongoing criminal money laundering investigation in Denmark. EY carried out an anti-money-laundering audit of Westpac. Westpac is being prosecuted for 23 million money-laundering related breaches.
Next time we will look at the investor supply chains, which might be impacted by this judgment and the “compromised … integrity, objectivity, and professionalism” of EY.
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