The ‘Big Four’ audit firms – Deloitte, EY, KPMG and PwC – all play a systemic role in economic crimes and State Capture. The evidence suggests that these firms have prioritised profit over professional duties and the law. Accountability and reform of the industry are thus essential.
In July, Open Secrets released the latest Corporations and Economic Crime Report (CECR). Volume 2 – The Auditors – draws on information from Open Secrets’ investigations and publicly available information to illustrate the crisis faced by the auditing industry and how this affects the public. Each of the next four instalments in the Unaccountable series will explore one of the Big Four firms. We start with Deloitte.
Auditors are supposed to provide an essential check on abuse in both the private and public sectors. When an auditor signs off on financial statements, it provides assurance to the public that the numbers match up and that they are a fair reflection of financial reality. The perceived credibility of a Big Four firm like Deloitte only adds to the weight that the public places in its findings. This is why an audit fulfils a crucial social utility and public good. It is also why the public cost of audit failure is so high.
Deloitte does not just know that the public looks to it for assurance, it actively trades on this as its business model. Celebrating its 175th year of operations this year, Deloitte states the following on its website:
“We’re not trusted because we’ve existed for 175 years. We’ve existed for 175 years because we’re trustworthy. That’s why clients choose Deloitte.”
But in the past six years alone, globally and locally, Deloitte has been implicated in audit failure, corporate malfeasance, and allegations linked to state capture. Despite this, there has been little accountability for the firm or its employees.