Sample Thesis Paper
Along with the subprime crisis, the news is abound with financial frauds and accounting scams ranging from the Satyam case in India to Parmalat in Italy (Byrnes). The investors who suffer in such scams rely on the work of independent auditors who review the financial statements of these companies and their reporting methodology and report any discrepancies so the investors know they can trust these statements.
When such auditing firms failed, they were liable to prosecution. However, they used to be shielded from these lawsuits effecting their global operations as these auditing firms operate as memberships, with each affiliate company being a member of the global group and reporting to a central office. Thus a law suit against one member cannot spread to the whole company. However, recent litigation threatens that shield as the courts are arguing that since the mission statement of the global auditors aims at controlling these members which are required to submit their documents for review to the central office and take recommendation about clients from other members, the whole company must be subject to a lawsuit if it arises (Byrnes). This places challenges for global firms like KPMG and Ernst and Young. As such, this does highlight the global role accounting plays in the world economy and how important an element it has become in financial decision making.