For those of you that may have thought that my grumpiness may have been tempered a bit by the advent of the holiday season…Bah Humbug! There is just so much accounting and financial reporting nonsense out there this quarter, that I have been simply overwhelmed by stuffing stockings with lumps of coal for my favorite global accounting firm (GAF) partners, and the humbug large bank clients they serve.
Let’s begin with Jonathan Weil’s recent discussion of Morgan Stanley’s “immaterial” $9.2 billion correction of an operating cash flow (OCF) classification error. The problem? Morgan Stanley (MS) accountants didn’t formally restate the Company’s financial reports for the error as required, instead opting for the sleazier “stealth restatement” route on the basis of immateriality. Where were the auditors? Well, the auditors actually appear to have discovered this error…my heart be still. But MS has been “audited” by Deloitte (of recent PCAOB fame) since 1997 according to Audit Analytics. Why should I be surprised that a GAF auditor actually found something, then looked the other way?