Ireland's bust and the culpability of the Professions

[TRS30]

Did the auditors of banks, especially IBRC, conduct themselves in a fit and proper professional manner is their annual external audit of these institutions?

On the face of it I would say they didn't.

 

[Jim2007]

Did the auditors of banks, especially IBRC, conduct themselves in a fit and proper professional manner is their annual external audit of these institutions?

On the face of it I would say they didn't.

Well as far as I remember on that one the professional bodies have been asked to hold off on examining the conduct of those professionals until the other investigations have been completed.

But that said it should be pointed out that the auditors duty is to the shareholders and not to the general public or the borrowers.

 

[Sunny]

Well as far as I remember on that one the professional bodies have been asked to hold off on examining the conduct of those professionals until the other investigations have been completed.

But that said it should be pointed out that the auditors duty is to the shareholders and not to the general public or the borrowers.

The same shareholders in Anglo, BOI, Irish Nationwide, PTSB and AIB that lost everything? Not blaming accountants but anyone who suggests the big 4 firms do not share some of the blame or have proven to be as useless as the banks themselves is living in dreamworld.

I won't even start talking about accounting standards and the power of accountancy bodies.

 

[Jim2007]

The same shareholders in Anglo, BOI, Irish Nationwide, PTSB and AIB that lost everything? Not blaming accountants but anyone who suggests the big 4 firms do not share some of the blame or have proven to be as useless as the banks themselves is living in dreamworld.

I won't even start talking about accounting standards and the power of accountancy bodies.

I did not express an opinion one way or the other! I simply pointed out that the only people who might hope to be compensated in anyway from a failure by the auditors would be the shareholders! They are the ones that appoint and pay the auditors and they are the ones who get to rely on the auditors work.

 

[Purple]

Hindsight required knowledge, foresight required wisdom.
We can and should reasonably expect accountants and lawyers, through their training and work, to have the former but wisdom cannot be trained.

 

[Bronte]

I agree with you that the client must make their own decision but if that decision is based on advice received by the Professional, then the advice received needs to be open to scrutiny and possible compensation
later, especially if the advice was relied upon and transpires to be incompetent or negligent or reckless.

Well you're kinda changing what you said in the first post. And other than your vague 'accountant' gave bad advice to client who was 'experienced' investor, no one on here has an actual concrete example of ordinary people buying BTL's on a solicitors or accountants advice.

In any case I don't see why they would be giving such advice.

If you move on from that to people who have a lot of money and a lot of investments. Anyone with more than one BTL. Well they have experience, they can seek a solicitors opinion and an accountants, but they should at the end of the day make their own decisions.

We see a current court case, someone with lots of money and no clue about finance and hey presto loses the lot. Whose fault is that?

 

[Bronte]

Not blaming accountants but anyone who suggests the big 4 firms do not share some of the blame or have proven to be as useless as the banks themselves is living in dreamworld.

.

I put the big 4 auditors in a different category to ordinary accountants and solicitors. OP was about ordinary run of the mill transactions.

My opinion of audits is that they are a work of fiction in general. And worded accordingly and no accountant ever will go down for getting one of those wrong. The big 4 are so smart since Enron they have divided up their legal title so that if one folds it does not bring down the rest.

 

[Dr.Debt]

Dear Bronte
I would need to correct you when you say that I'm "kinda changing what you said" I'm not kinda changing anything I said.

 

[TRS30]

I did not express an opinion one way or the other! I simply pointed out that the only people who might hope to be compensated in anyway from a failure by the auditors would be the shareholders! They are the ones that appoint and pay the auditors and they are the ones who get to rely on the auditors work.

While the shareholders might be the ones looking for compensation, the tax payer in general is the one left paying.

 

[Luternau]

While the shareholders might be the ones looking for compensation, the tax payer in general is the one left paying.

But the point is that the auditors had no duty to the public and no matter how culpable they may be for the failures of banks, the public has no recourse to them.

 

[TRS30]

But the point is that the auditors had no duty to the public and no matter how culpable they may be for the failures of banks, the public has no recourse to them.

As professionals they are bound by a due of care in the work that they do. Society as a whole can only have confidence in any industry based on the conduct of it participants and those who regulate them.

 

[Negotiator]

Little is ever mentioned about the commercial estate agents who were over-inflating the valuations of commercial (and residential) properties. For example, a commercial estate agent acting on behalf of a landlord was setting a headline rent on a commercial lease at say €100k per year but abating it back to €80k as a side agreement. All this was being done as a complete charade to inflate the value of their property so they could borrow more money against that asset. This was common practice during the boom years and it's a disgrace it was ever allowed to happen.

If you think this only effected a small % of the population who were renting these premises you're wrong, because this in turn fed into the rest of the economy as these same landlords were able to borrow to build blocks of residential units etc based on false valuations of their own assets......and on and on it went until............CRASH!!

Many of these same agents are carrying out a lot of work for NAMA and banks since the crash and doing nicely out of the mess that they played a big part in........MADNESS!

 

[Luternau]

As professionals they are bound by a due of care in the work that they do. Society as a whole can only have confidence in any industry based on the conduct of it participants and those who regulate them.

An auditors duty is to those that they work for. In the case of the banks, that was the shareholders.

I agree society is based on honourable conduct etc but bank auditors have no direct duty to society.

 

[TRS30]

An auditors duty is to those that they work for. In the case of the banks, that was the shareholders.

I agree society is based on honourable conduct etc but bank auditors have no direct duty to society.

Agree.

Since so many bank shareholders have lost so much, including large institutional investors, I'm surprise no case has been taken against any auditors. Especially around the Anglo/ Irish Permanent carry on.

My point about society was more a ramble about ethics and morals that seem to be lacking in some professions.

 

[Bronte]

Dear Bronte
I would need to correct you when you say that I'm "kinda changing what you said" I'm not kinda changing anything I said.

Can you give one concrete example of an accountant or solicitor causing someone to lose money? You've said they were widely asked for advice on financial decisions. And that that advice was incorrect and ergo they should be sued?

If what you say is true then how come 'everybody' isn't suing accountants and solicitors for the mess they find themselves in?

I think you'll find the truth is that people themselves made the wrong decisions, falsified the P60's, with brokers in particular up to all sorts of tricks and banks turning a blind eye in an effort to shovel out as much mortgages as possible, with targets for the bank staff and bonuses flying everywhere, and a regulator asleep on the job and government in on the whole thing.

In addition I believe that a whole load of accountants and solicitors believed in the whole pyramid scheme themselves and are up to their necks in debt.

 

[cremeegg]

In reading about the bust I have always been astonished at the number of large investors or developers who borrowed money through limited liability companies and then signed personal guarantees for the borrowings.

Any accountant or solicitor who failed to point out the idiocy of this wasnt worth their fee.