Member firms of four of Big Five fined | ICAEW Economia

Enron was created in 1986 to capitalize on opportunities arising from deregulation of the US natural gas industry. However, due it's $100 billion debacle in 2001 (Kendall & Kendall, n.d.), securities industry regulators and public accounting professionals were very concerned about a potential loss of investor and public confidence (Goelzer, 2006) in corporate financial reports.

To remedy this situation, now overseeing the vast majority of audits (Miles CPAReview, 2013) for both publicly-traded and private companies listed on the London Stock Exchange is the 'Big Four': Deloitte, PricewaterhouseCoopers (PwC), Ernest & Young (EY) and KPMG, which are professional services networks offering audits, assurance services, taxation, management consulting, advisory, actuarial, corporate finance and legal services—but, Houston, we have a problem.

The Public Company Accounting Oversight Board (PCAOB), a US private-sector, nonprofit watchdog incorporated by the Sarbanes–Oxley Act of 2002 (Higgs, 2013), has recently cracked down on registered foreign audit firms based outside the US that fail to comply with its rules. The PCAOB announced Wednesday that it had fined six foreign members of the Big-Four networks that had fallen foul of Rule 2203 of its Bylaw and Rules (PCAOB.org, 2017), which requires notifying the PCAOB board of disciplinary or legal proceedings against it or its partners relating to their work.

List of References:

Goelzer, D.L. (2006, Jul. 6). Lessons from Enron: The Importance of Proper Accounting Oversight. Retrieved from https://pcaobus.org/News/Speech/Pages/07262006_GoelzerTokyoAmericanCenter.aspx

Higgs, J. (2013, Jul 19). PCAOB Overview. Retrieved from https://www.youtube.com/watch?v=q-MhwL810IE

Irvine, J (2017, Mar. 30). Member firms of four of Big Five fined. Retrieved from http://economia.icaew.com/en/news/march-2017/member-firms-of-four-of-big-five-fined

Kendall, N. & Kendall, A. (n.d.). Enron Case study. Retrieved April 1, 2017 from http://www.applied-corporate-governance.com/enron-case-study.html

Miles CPAReview. (2013, Mar. 25). Introduction To Auditing | Auditing and Attestation (AUD) | Miles CPA Review. Retrieved from https://www.youtube.com/watch?v=2O2LNmvhlrc

Pcaobus.org. (n.d.). Public Company Accounting Oversight Board. Retrieved March 31, 2017 from https://pcaobus.org/

Pcaobus.org. (2016, Jul 12). Bylaws and Rules of the Public Company Accounting Oversight Board. Retrieved from https://pcaobus.org/Rules/Documents/All.pdf