With the recent accounting debacles concerning the collapse or near collapse of numerous huge businesses like Carillion, Interserve and Patisserie Valerie, I was reminded of an accounting ‘incident’ during my time with Porsche.
Many years ago I was chatting to a friend, who happened to be an accountant, about the fact that our Porsche business was changing auditors from a small local company to one of the ‘big four’.
We had recently become part of a medium sized luxury car Group and the people at the top had made this change, first of all on cost, and secondly because… “it was appropriate for a business of our size to be handled by one of the ‘big four’.”
‘A rookie review and a rubber stamp, that’s what you’ll get now’, my friend said. ‘Those boys are only after the volume and the glory of it all’.
I thought nothing more about these remarks. Although I did think at the time it was a strange thing to say, and was probably said out of peak because the ‘big four’ were making life tough for the smaller accounting firms.
And so it came to pass, some time later we had a visit from our local office of one of the ‘big four’. As our Porsche business was new to the Group we were to get a full audit that year.
In the weeks before the audit proper (which was to take place over a 2 week period), we had been given a list of instructions based on what was required of us to prepare for the visit, to ensure the audit would progress smoothly. All relevant people worked hard to make sure these forms and lists were completed and that everything was in place for their arrival.
For most of the audit period the work was carried out by ‘schoolboys’ and ‘school girls’ or should I say very junior people who looked like they had recently left college. Pleasant folk who nervously kept their heads down and kept themselves to themselves.
For the final 2 days of the audit the local Branch Manager appeared on site for a few hours on both days, looking very ‘official’, seemingly studying everything in detail and asking his team lots of questions, whilst also spending a lot of time looking at the cars in the showroom.
Whilst he was on site, one of the ‘schoolboys’ came into my office and inquired about the whereabouts of some of our company ‘loan cars’. These are the vehicles which we lend to our customers whilst theirs are in for servicing.
I told him we had already given him the forms detailing where every car was as per their requirements:- including dates, telephone numbers, addresses, etc. etc, but he said he couldn’t find some the forms.
There were three cars being queried, two Mazdas and a Porsche.
Just to wind them up, I told him my wife was driving one of the Mazdas and the other one was over in Ireland as my son was using it whilst he was at university. The Porsche, I said, could be seen on the front lawn of my house with a ‘for sale’ sign on it, as I needed the cash.
To my amazement the ‘schoolboy’ took notes, thanked me, and duly went over to his boss and I assume told him everything I had said.
I waited for either of them to come back to me, but nothing happened.
Towards the end of the day I actually got quite concerned as apparently the audit had been finished, all the auditors had left yet no one had spoken to me before leaving.
So, fearing my mischievous remarks would get me in trouble, I rang my boss and told him the story as inevitably I felt they would be in touch with him to reveal this potentially dodgy behaviour.
He laughed and said he would keep me posted as to what happened.
And guess what? Nothing happened.
Nobody spoke to my boss, nobody came back to me to investigate my remarks, nothing.
Was this just because the auditors were incompetent?
Was it a case of them not wanting to ‘rock the boat’ on a new account?
I don’t know.
Or perhaps it was indeed just as my accountant friend had said…
‘A rookie review and a rubber stamp, that’s what you’ll get now’.
Has much changed over the years?