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lungben81 t1_ixzefhc wrote

And there is absolutely no conflict of interest when they do audit and consulting at the same time...

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polkaguy6000 t1_ixzjvgx wrote

Good thing that hasn't been allowed for the last 20 years: https://en.wikipedia.org/wiki/Sarbanes–Oxley_Act

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Noumenon_Invictus t1_ixzprlq wrote

It still exists

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Velvy71 t1_ixzrdoh wrote

Yeah, because the big four don’t help governments set policies which disadvantage the small and solo consultancies. In the UK they’ve heavily influenced the tax treatment of small companies, leaving the market open only to the very biggest. So maybe they’re not directly breaching SOx and it’s European equivalents, but they are certainly profiting from an ability to shape the market for each other.

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LeviathanGank t1_ixzwspw wrote

yes but they are looking out for their client, not the little guy.. they are scum bags

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HegemonNYC t1_ixzud3h wrote

They aren’t allowed to advise and audit the same client.

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lungben81 t1_iy04sm7 wrote

The Big4 are quite active in consulting business at large financial institutions (at least in Germany). At the same time, there are only these 4 audit firms and auditors must change every few years. Thus, the likelihood that the same company is consulting and auditing the same client at the same time, or in short succession, is quite high.

The official "solution" to this potential conflict of interest is that 2 different sections of the big4 company do consulting and auditing. But I do not know how solid this separation is in practice.

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DeTrotseTuinkabouter t1_iy0hhmr wrote

The likelihood is very damn low. I worked at a Big4 in consulting, not being able to service audit customers was a huge problem for us and simply cut our addressable market by 25% (assuming that there are only four audit firms and we were one of them). I think technically to some amount it could be exempted but in practice it was as good as impossible.

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dragonlax t1_iy0ylq3 wrote

Literally part of the proposal process is making sure there are no audit restrictions. (I worked at EY for 5 years in consulting)

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kthnxbai123 t1_ixzuiun wrote

Most big orgs heavily enforce no conflicts of interests. A few contracts aren’t worth the loss in prestige if there are even whispers of it.

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DeTrotseTuinkabouter t1_iy0hn5u wrote

The fact that this is upvotes speaks volumes about how much you should trust comments and opinions on Reddit.

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amerricka369 t1_iy05pg7 wrote

They aren’t allowed to consult and audit on same client. EY is spinning out their consulting business as a separate company and the other 3 are considering it as well.

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IambicPentakill t1_iy0fsuu wrote

The accounting industry has been very heavily regulated since twenty years ago.

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LeviathanGank t1_ixzwnrw wrote

they generally consult and audit against each other.. wont be all in house

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dragonlax t1_iy0ygkw wrote

They legally can’t do consulting work for clients they audit, I worked at EY consulting for 5 years and it was a pain because we were missing out on huge projects, hence why they’re spinning off consulting.

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lungben81 t1_iy2kef5 wrote

How is the separation done? Are these 2 different legal entities? Are they located in different buildings? Do they have different owners? Is there an overlap / exchange of employees?

The brand names are obviously not different.

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dragonlax t1_iy3a8mi wrote

It’s regulated by the US and other local governments. There are internal processes that are also in place to prevent the conflict of interest.

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pale_blue_dots t1_ixziy46 wrote

Nah. Not at all. Just like how many large investment firms have market maker arms and hedge fund arms. They'd never, ever communicate between their branches to make boatloads of money.

Edit: lol what the hell... nice downvotes for sheer, unadulterated facts.

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