Customer Reviews

Unaccountable: How the Accounting Profession Forfeited a Public Trust

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and bought the book, because thats where Brewster worked as a communications guy (spinmaster). Despite the fact that he was not an auditor (or perhaps because he wasn't) I found the book to be an excellent analysis of what STILL troubles the Big 4. Mr. Brewster knows of what he speaks-and wrote the book before KPMG was almost "Andersened" in the Summer of 2005. Absent a government concerns warning of further reductions in big accounting firms-It might be the "Big 3" now.

These firms advertise their work as the Good Housekeeping Seal of approval to the public, but the truth is that the public would be shocked to see how little value is added by the outside auditors. A modern organization is simply to complicated and produces to much data to allow anything more than a very limited review of the financial data, focused on areas of greatest risk.

The direct relationship between the auditor and the management inevitably means following professional standards is a an objective subordinated to pleasing the client and meeting the time budget. Large companies aren't paying for anything more than a clean bill of health and partners are somewhere between hairdressers and pimps to a big company. They are of course, well paid for their "services".

An example of what I mean would be the common practice of SALY (Same As Last Year), when the bright-eyed young auditor finds out that the wiley old Controller they think they are smarter than runs rings around them. This usually comes as a surprise to staff, since they've been told they are the "best and brightest" since they were recruited,usually as juniors. Not one wonders if they were the "best and brightest" would they instead have been at Harvard Med School. Ironically, KPMG managers and partners often gave little value to an MBA degree, mostly because they rarely get them.

Unless the error (mistatement) or potential for misstatement is so egregious as to be a great big red flag to the PCAOB, the SEC or a jury, a great deal of the errors are simply written off as I/M (immaterial). A large audit's "workpapers" fills tens or even hundreds of binders and they know screwups will have to be frequent or huge to be spotted.

Untill auditors are hired by, and paid by, the SEC or an organization that provides insurance that the financial statements are "fairly stated", this situation will persist. The American economy spends BILLIONS to support the lavish lifestyles of Big 4 partners and we still have mal- and mis-feasance.

If you want more information about KPMG, read the inspection report issued last year by the PCAOB, or the issues related to audits where KPMG was sued (Fannie Mae, Rite Aid, now Ahold)

This book explains how consulting really overtook auditing at the big firms. As a former Big 5 auditor, I saw this with my own eyes and this author, who apparently worked at KPMG, also saw it happen. The last few years of scandal can be better understood if you really know how the consulting/auditing relationship works.

I found this book very interesting, despite some minor errors. After all, it is a big subject. The book is the best explanation I've yet seen of the transformation of the professions into businesses like any other, and the absolute dichotomy between what the public thinks auditors do and what the auditors actually do. Unfortunately, I think what one takes away from this is: don't buy stocks, you can't know what's going on with them. Although "Unaccountable" makes the accounting profession look bad, absent a complete restructuring fo the financial markets accountants will continue to work to please the management rather than the investors, because that is the only way the accountants can survive. The same is true for lawyers, bankers, and rating agencies.

As a longtime consultant, now retired, I was pleasantly surprised to read Unaccountable. The book offers a balanced view of an area that is too often seen in blacks and whites, especially today when facile solutions to complex problems seem more the rule than the exception.

The book presented a world of individuals and groups subject to human pressures to succeed and compete, and along the way bend the rules to gain advantage. But it also took pains to show the good parts of a professional culture once built on integrity that has, unfortunately, made some unwise compromises of late.

The book's broad historical and personal perspective also adds interest to the discussion. In many ways, Unaccountable rings true to me, and for those with the time and patience to stop and consider what is really going on beyond the vogue for seeking quick fixes and scapegoats, it also points out a path toward sensible reform.

This provided to be an extremely valuable wider context to research that I was doing on Arthur Andersen's demise. It begins with the ancient Greeks and their Ventian counterparts during the Renaissance(!), and progresses to the present-day crisis in the accounting profession. Brewster writes about it all as clearly as a professional writer-reporter would, which is enjoyable considering how many dry and self-serving academic books there are on the subject today. While he does not add anything all that original about the present time, his book does convincingly demonstrate that AA was not any worse than the other firms, though with a series of missteps and its involvement with Enron it made itself, in Brewster's words, "an ideal target" of the government. But all the big acct firms desired to make money from their insider knowledge: they lost their ideal of public service, i.e. guarantors of the underpinings of the capitalist system. This bears out my own research and as such is an extremely useful book for anyone attempting to put this arcane and vital-for-capitalism discipline - accounting - in context.

Recommended as an ideal introduction to those who are interested. Admittedly, that is a rather important caveat.

This book starts with the history of accounting, from about 8000 BC continuing to current events. This is better than it sounds. A main focus of the book is on the development of the accounting culture in the United States from the 1890s, the development of accounting standards, and how accountants gained the public trust. An important theme is that without the public trust, auditors don't have anything to sell; what good is the assurance of someone who can not be trusted?

The majority of the book focuses on recent and current events. Beginning in the 1950s, the culture of audit firms changed so that the focus was on growth and building a profitable business. Prior to that, there was a much greater awareness of the public as a major stakeholder. It is called public accounting after all. The coverage of the culture shift and the resulting loss of faith in the audit profession is first rate. This is a problem that the profession is just beginning to address. Good information if you are interested in a career as an auditor.

While there are several other books that cover this general history, this book digs in with much greater detail. Throughout its long (but not exhaustive) review of the history of public accounting and auditing, many primary sources give a much better overview of the politics and controversies that have plagued accounting over the years. Linking 1930s legislation to the latest accounting debacle was no easy feat, but the book does so with several clear theses that are well-linked throughout.

Instead of repeating the same "SarBox will fix it" conclusions about the future of accounting, this book returns to its primary research in to present a more well-rounded impression of what challenges the future brings, what time bombs are (still!) waiting for the profession and what those on both sides of the regulatory line have to say abou it.

I saw this fairly obscure book recommended by Harvard Business Review Online. I'm an MBS student and this is a great introduction to the dual nature of auditors: in the business of making money but supposedly beholden ot the public. The author does a great job of showing how the big firms got caught up in the quest for business and forgot about their second duty. Not sure why I haven't seen more of this book; probably not sensationalistic enough.

This book doesn't just tell you what has been going on with the accounting profession during the last twenty years. It details the great history of accounting. Based on the historical backdrop, the current behavior of the former "big eight" takes on tragic proportions. As an indivdiual that studied much to receive a Masters degree in accounting, I am much encouraged that this sad era is closer to ending then beginning. The arrogance of these mega firms are causing them to self destruct on their own. The economy will be much better served when the country has twenty plus larger firms again instead of the current four. Mike Brewster does a great job of giving the reader an inside look at a mega firm and a great job of going back in time to explain the profession from an historical viewpoint.

Unfortunately, this book was not carefully fact-checked. For example, on page 115, Brewster names Hain Hurdman as one of the Big-8 firms in the mid-60s, but omits Arthur Young & Company. On page 293, Brewster identifies Ernst & Young as IBM's auditor. That is certainly untrue in the US (PwC are the auditors), and one cannot discern from the text whether the reference id to E&Y's French affiliate. Throughout the book, Brewster consistently gets Laskawy's name wrong. Early in the book, the author cites Florie Munroe, an internal auditor at Greenwich Hospital and who "rose to senior manager [at PwC], as a reliable source for partners' work habits. Give me a break!