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Audit Firms' Global Ambitions Come Home To Roost

Publication Date: 
February 02, 2009
Business Week
Nanette Byrnes

Professor Joseph A. Grundfest is quoted in a Business Week article about global audit firms being held liable for the actions of their local affiliates in lawsuits brought in the wake of the financial crisis:

Auditing has never been more global than it is today. That point was driven home with news coverage of the Jan. 24 arrest of two partners of Price Waterhouse India over the audit of tech outsourcer Satyam. And the prospect of rising liability is something none of the Big 4 welcomes.

"All of them [audit firms] have structures designed to build fire walls" between local companies and the global firm, says Stanford law professor and former SEC commissioner Joseph A. Grundfest. "The question is, will the dikes hold when you have this kind of a flood?"