Ernst & Young audit at Leymann Brothers: software and GRC

The BBC article on Davos 2011 lays a great deal of emphasis on Leymann Brothers failing.

But an earlier article on Ernst & Young is more to the point: but it still misses a critical point.

It is not just that there are so few global audit firms, it is also that more than one ( 1 of 4, 2 of 4, 3 of 4) use the same software vendor for audit.

This is not the same as all using Microsoft Excel. Spreadsheets as such are not designed for risk management and reporting.  As with Enron, Leymann Brothers was a GRC failure: Governance, Risk and Compliance.  It was not just fraud.

The problem begins all too often with what it takes to become a partner in one of the Big Four.  An audit partner.  These firms spit out a great many articling students, auditors and managers before one of them becomes a partner.  This is not like a criminal law firm where a barrister is seem and heard in court as part of the record.

It has been said of justice in modern Bulgaria that it is often hard to tell who is acting as prosecutor, who as judge and who as defense - based on their actions.  There is much more hope for justice in Bulgaria than for an end to problems in the global accounting firms.

Software can play a role here just as it can play a role in "following the money" in the more pedestrian variety of wrong-doing.  But the audit software in use now is more "handy" than it is "smart".  But what expert will review the design, maintenance and evolution of that software?

If Airbus and Boeing were using the same software for autopilots - and only equipped with one such system - an international aviation body would intervene.  But this is audit. And we are dealing with some high flyers and egregious behavior.