The Big Four accounting firms are one (more) scandal away from collapse
Mutually assured destruction at the heart of the economy.
One of the wildest features of the crypto wipeout is that all of these “multi-billion-dollar” firms never bothered with an independent audit, and they all turned out to be lying about their balance sheets.
Amidst this carnage, it’s easy to forget that the Big Four accounting firms are terrible enablers of fraud, and the fact that they sign off on your books is no guarantee that you’re not a giant scam waiting to implode.
This is just *wild* to consider. After all, independent auditors are the lifeblood of capitalism. Rich people *really* need to know that the people they trust with their money aren’t lying about their finances. Usually rich people get their way.
But not with accounting. Accountancy has dwindled to four massive, structurally important, terminally conflicted companies: EY, KPMG, PWC and Deloitte, and all four make more money selling “consulting” to companies than they do for signing off on their books.
That means that the Big Four routinely sign off on fraudulent books, because a failure to make nice with companies that are cheating the taxman and/or their investors and/or their creditors will cost the Big Four those fat consulting contracts.
Besides, the Big Four have a sweet gig: when they sign off on fraudulent books — as all four did for Carillion, the company that went bust in 2018 after billions went missing — they are the only companies big enough to oversee the bankruptcies. All four made millions off of Carillion’s bankruptcies.
Shorn of any consequences for wrongdoing, the Big Four are hotbeds of corruption. Who can forget when KPMG’s top management was fined millions…for helping their auditors cheat…on *ethics exams* (!!!!).
There is a contradiction at the heart of “consulting” and auditing. The consultant’s job is to help a company obscure its bad deeds — for example, helping it hide its tax fraud, or its wage theft — while an…