For three years in a row the Department of Housing and Urban Development has received the same accounting and internal controls conclusion from the audit of its financials. What is the conclusion: the audit found 11 material weaknesses, seven significant deficiencies in internal controls, and five instances of noncompliance with applicable laws and regulations. To add to that one of its subsidiary Ginnie Mae could not even present its material asset balances related to some loan assets in an audit ready state.
One may ask, so what is the company doing about it. Well looks like nothing, the officials refuse to explain why they haven’t fixed the poor accounting practices and fixed the financials. If they cant maintain their financials properly, how can they be trusted to safeguard the taxpayer money!
The fight between HP and Autonomy saw the former autonomy CFO, Sushovan Hussain, being charged with accounting fraud by a federal grand jury in the US. The charges against Hussain alleged that he made false and misleading statements about Autonomy’s finances, put fraudulent entries into the company’s books, issued false and misleading quarterly and annual reports, and pressured and paid off people who raised complaints about the firm’s financial practices and performance.
The war between HP and Autonomy’s former management started when HP found issues in the Autonomy’s financials a few months after they bought the company for billions of dollars. More specifically; HP bought Autonomy in Q4 2011 for £6.7 billion, but in 2014 HP revised the 2010 accounts for Autonomy reducing the revenue and profit by up to 81%. HP took a £4 billion hit when they wrote off their investment in Autonomy.
The interesting thing in the deal was that all of the Big 4 firms were directly or indirectly involved in the transaction. Deloitte was the auditor for Autonomy and signed off on their 2010 financials, KPMG did the due diligence on Autonomy, PwC carried out the report into the takeover and finally EY are HP’s auditors and signed off on the restated financials. So in this case not sure which one of the audit firms are to be blamed! Maybe its a group effort.
Newly appointed CEO Dave Lewis started his tenure at Tesco by suspending four executives after discovering some serious accounting irregularities.
The company came to know of the issue when an informed employee went to the company’s general counsel to report the matter. The issue was that the company had been overly ambitious when predicting the sales of products in its UK food business. The company apparently also misreported in its accounts the costs of waste and shrinkage. Overstatement of income and understatement of expenses led to an overstatement of expected profit by ~$400M for the first half of the year.
The company’s auditor PWC had not yet examined the figures for the first half profit. But in its fiscal 2014 audit report on Tesco, released in May, PwC paid particular attention to commercial income and it matched up Tesco’s recognized commercial income with contractual evidence. Tesco has now engaged Deloitte to investigate the irregularity. Hopefully the new auditors won’t discover any new irregularity!