IT Consultants Make Friendly Auditors

from the that's-weird dept

Wed, Aug 29th 2001 9:55am — Mike Masnick

If you hire a big 5 accounting firm to do your audits, you might want to think about using them for your IT consulting needs as well. A new study shows that firms that use IT consultants and auditors from the same firm find out their financial results look better than those that don't. There are plenty of possible reasons - such as the firm turning a "blind eye" on accounting irregularities to help prop up the company so they'll continue paying IT consulting fees. Or, it could just be that the accounting/consulting firm learns more about the company by having more to do with them. Of course, the accounting firms would like you to believe it just means that companies that hire them for both are simply better companies.

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2 Comments

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sb, 29 Aug 2001 @ 11:09am

No Subject Given
Just a coincidence. The consulting and auditing arms of the Big 5 have almost zero interfacing. They might as well be seperate firms. this is a case of trying to find results in random data. Fit the data to your theory....See what you want to see....

PS: are my posts better now that the vulgarity is removed? (vulgarity seemed to be the only real concrete criticism i could glean)
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- Mike (profile), 29 Aug 2001 @ 2:05pm
  
  Re: No Subject Given
  Actually, I thought the same thing at first... but the fact is that the auditing folks can certainly find out pretty easily that their IT services group is associated with the company (I'm sure they see it when reviewing the books) so there could be an unconscious bias. It might just be a coincdenence... but it doesn't necessarily mean that they were just finding results in random data. If there's clearly a difference then there's a difference. The question remains why.
  
  As for your comments, they are better without the vulgarity. The other critique was that you tend to assume your arguments are concrete without any backup. I have no problem with people stating opinions, but stating opinions as fact can get tiresome.
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