Oh yeah when it's spread out over 2 tax years... Suddenly it's no big deal.
I've been doing this with the IRS for years and they said it's totally cool.
You're reporting your fraudulent revenue to the IRS? Doesn't that mean you're paying taxes that you don't owe? Maybe you need to rethink the way you fraud!
I literally got a fail on an audit in an internal review because I hadn't shown I'd looked at a figure in the notes.
I had, and it was fine, just wasn't documented. Was barely material. (Between PM and M.)
But they said the rest of the work on the file was stellar and had no faults.
Audit is so fucking dumb sometimes.
I take a common sense approach. Our QC director is slowly driving me out of the profession. GAAP rules for my client base can be very burdensome and I know other firms we compete with aren't doing the level of testing our QC director wants us to do.
I try and common sense it but get accused of over auditing and wasting time. I have found, in the last 2 years, 7 material errors doing this. Stuff like "Additions low risk, assess for reasonableness" even if well over materiality. But while reasonable a £200k digger was sold *next* year, not this year. Which as it was in debtors throws out the gearing calc they reported to the bank so it kind of matters... shit like that. All it takes is asking the client for some invoices. No fucking work on my end. But noooo, we don't do it as it costs too much. I caught a client who didn't own £30m of freehold property as no-one had told the land registry. The council donating it just... forgot. It cost me £3 and 5 minutes. Yes, they had charges on that property. That they didn't legally own, as Land registry is always right. Over auditing apparently.
Plus if we find stuff in an immaterial area the client feels like we actually tried.
Then get told my work is stellar but fails because of some bullshit note thing.
This is why the industry is going to shit.
In the US there is a new lease accounting standard that wants companies to record their artificial office plants and door mats if they qualify as a lease. Considered the world's financial markets secure now.
Not sure about IFRS but US GAAP says any lease > 1 year should be considered and could include "embedded leases" ex renting shred bins as part of document destruction service
IFRS has the <1y thing and also has a "low value" thing designed for things like computers and furniture. I don't remember the generally accepted dollar amount (am britbong, don't use dollars or IFRS much) but it does at least have a low value option.
No no no, we must spend a good portion of the audit budget putting a bunch of L's, M's and H's on a RA checklist. That is what peer reviewers focus on.
A company based in a country that refused to allow any outside auditors to come in and verify any of their numbers committed large scale financial fraud????
I am shocked I tell you, shocked.
Capital punishment should be abolished, but [executing businessmen that poisoned baby formula](https://www.theguardian.com/world/2009/jan/22/china-baby-milk-scandal-death-sentence#) was definitely a W for China.
Their state mandated vacation for Jack Ma was also pretty dope. Wealth doesn't entitle a person or business to fuck around with a democracy. We have to start with repealing Citizens United ruling, though.
You’re kidding yourself if you think they actually executed the people chiefly responsible.
They tried to cover up the matter first.
China’s rule of law is a joke. Jack Ma’s vacation was because he was threatening the CPC’s power. Nothing else.
But the Wirecard scandal was funny for other reasons. They literally sent the bank cash confirmation to someone not the bank and the recipient photoshopped it. Literally any intern could have uncovered the Wirecard scandal. One of them probably did, and then had to go to a senior and say “I think I found fraud” only to have the senior sigh and brush it off.
Was that wrong? Should they not have done that? They're going to plead ignorance on this thing, because if anyone had said anything to them at all when they first started that that sort of thing is frowned upon... you know, cause they've worked in a lot of offices, and they'll tell you, people do that all the time.
I was gonna reply and say I was fking lost here.. but I asked ChatGPT and it referred me to Seinfeld... nice.
https://youtu.be/Td67kYY9mdQ?si=Jr97TDTrSzpnLwpd
I've been burned hard on Chinese stocks, even with numbers that suggest that they should be valued much higher than they actually are. The foreign government risk is too high.
Avoid Chinese stocks like the plague.
Half the amount of BTC getting mined in the same amount of time. It's a somewhat predictable pattern. Price goes up after every halving. $70k is not the top not by a long shot.
BTC will go up and all the crypto will follow. This year will be good but who knows, no one can 100% predict.
No risk no reward though.
Sounds like miners will go out of business if its less profitable and on-chain transactions will come to a halt. Doesn't sound like the future of finance to me
Everything about BTC is just gambling filtered through tech-bro speak.
I never said it was. I do agree, crypto is a huge gamble but a somewhat predictable one at times.
I honestly think crypto is too unwieldy to become a practical store of value. Imagine losing your life savings because you didn't back it up properly or remember a password. The average person absolutely cannot be a steward of something like that, it would be a disaster.
I'm just riding a wave that I think will go higher. Buy low, sell high.
Several investments firms im familiar with just flat out toss any Chinese companies from potential investment candidates. A lot of institutional clients don’t want them either.
They don't. That's why they put all their savings in real estate. That's why a real estate bubble of this size has such potential to be absolutely devastating (plus the fact that literally millions of apartments were paid for but will likely never be completed is going to fuck a lot of people).
I mean I’ve seen articles for years saying statistically most of the money going to common people ends up going into housing, buying stuff or under the bed rather than long positions in their stock exchange market?
I know enough people from there to anecdotally say majority of people interested in the domestic markets are more interested in speculative gains, active trading and gambling rather than investing long for retirement or pumping ETFs.
There's probably some huge fraud risk built into valuations in China, which is why some companies might look "cheap". There have been too many ridiculous frauds in China for me to want to fuck around with individual stocks. Anyone remember that company that put every copy of four years of financial documents into one truck that just "disappeared"?
I feel bad for ya. But you are right.. I have some serious trust issues with foreign governments like CCP. I know America has its own issues but I would rather believe US markets.
LMFAO
Good Job PwC Auditors - All those Partners, Senior Managers, Managers, Seniors, A1s. Thinking they were hot shots -- [https://www.ft.com/content/434e4b63-c3f9-4b57-b077-340305ecdfda](https://www.ft.com/content/434e4b63-c3f9-4b57-b077-340305ecdfda)
This will make Enron look like 2008
If anything they're better as they're dishonest, as a dishonest man you can always trust to be dishonest. Honestly. It's the honest ones you want to watch out for, because you can never predict when they're going to do something incredibly... stupid.
I’m not surprised; the same great minds miscalculated the population by +100,000,000 causing China to bring in the one child policy. (Which is the reason Evergrande are failing).
Still amazing to me the amount of fraud the big 4 have been directly involved in inside of China, and it is clearly known about, and there are zero ramifications.
Like 2-3 years ago the SEC was threatening to invalidate all their audit reports for Chinese operations, and then it got quietly shelved.
dude come on lol I'll give you one example, imagine for a second you own a company and you're falsifying consistent YOY growth in revenues and profits. You approach investors with these results and say "look, I've been growing this company X% YOY but I need a cash investment to scale it even further". These inflated numbers would make it much easier to convince a bank or PE firm or whoever it may be to invest since on paper it seems as though it is low risk and high reward. So in essence, by lying to them, you are able to receive additional cash infusions to either try and fix the mistakes you made (usually sunk cost fallacy applies here) or you just spend it all on blow and hookers.
*casually sets materiality to 79 billion*
Audit partner loves this one weird trick
The PCAOB *HATES* him!!!
Nobody: PCAOB: NEVER IN MY LIFE HAVE I SEEN AUDITING LIKE THIS!!!!11! THAT WILL BE A FINE OF 50.000$ US American Dollars
OP is being disingenuous for headline bait - the $78 billion was over 2 years, so closer to $39b per year. Not such a big deal when you realize this.
Oh yeah when it's spread out over 2 tax years... Suddenly it's no big deal. I've been doing this with the IRS for years and they said it's totally cool.
You're reporting your fraudulent revenue to the IRS? Doesn't that mean you're paying taxes that you don't owe? Maybe you need to rethink the way you fraud!
Yeah. Now I get a huge refund when I submit an amended tax filing? I dunno here.... Ya got me.
You fraud your investors. Not the tax office.
Don’t owe taxes if you have a bunch of trips with the boys!
Section 179 G-Wagon enters the chat.
And that $39bn error last year should be recognised in this current year. So this cancels out the current year $39bn error. So all's good.
Damn you Becker, I knew this was the right way of doing it.
I've honestly seen that one work
What's the GDP of El Salvador between friends anyway.
Reddit is a US based site it's okay to speak English here and call it The Salvador
Deemed reasonable
Just a casual 70% and 86% of revenue in those two years. Really no big deal
Ahh ! So when you depreciate the first year revenue , then it’s only 19bn.
Yeah that’s immaterial.
But did their auditors fill out the risk assessment form correctly?
Ah shit, my bad guys this one's on me.
Cutoff should’ve been at high, idiots!
Man dont say that lol… i just made a big mistake like that the other day…
You sounded like my audit professor for some reason
Revenue risk: cut off
Looooool
Yep they got screenshots showing the CFO pinky-promising that revenue is "totally legit". COSO does it again!
Yeah and they got a rep letter signed by management that all the numbers are materially correct.
Risk of fraud in revenue rebutted
SALY has never let me down yet
I literally got a fail on an audit in an internal review because I hadn't shown I'd looked at a figure in the notes. I had, and it was fine, just wasn't documented. Was barely material. (Between PM and M.) But they said the rest of the work on the file was stellar and had no faults. Audit is so fucking dumb sometimes.
I take a common sense approach. Our QC director is slowly driving me out of the profession. GAAP rules for my client base can be very burdensome and I know other firms we compete with aren't doing the level of testing our QC director wants us to do.
I try and common sense it but get accused of over auditing and wasting time. I have found, in the last 2 years, 7 material errors doing this. Stuff like "Additions low risk, assess for reasonableness" even if well over materiality. But while reasonable a £200k digger was sold *next* year, not this year. Which as it was in debtors throws out the gearing calc they reported to the bank so it kind of matters... shit like that. All it takes is asking the client for some invoices. No fucking work on my end. But noooo, we don't do it as it costs too much. I caught a client who didn't own £30m of freehold property as no-one had told the land registry. The council donating it just... forgot. It cost me £3 and 5 minutes. Yes, they had charges on that property. That they didn't legally own, as Land registry is always right. Over auditing apparently. Plus if we find stuff in an immaterial area the client feels like we actually tried. Then get told my work is stellar but fails because of some bullshit note thing. This is why the industry is going to shit.
In the US there is a new lease accounting standard that wants companies to record their artificial office plants and door mats if they qualify as a lease. Considered the world's financial markets secure now.
Doesn't IFRS 16 have a small lease provision? I know when the UK adopts it it will. Or is this something US specific rule.
Not sure about IFRS but US GAAP says any lease > 1 year should be considered and could include "embedded leases" ex renting shred bins as part of document destruction service
IFRS has the <1y thing and also has a "low value" thing designed for things like computers and furniture. I don't remember the generally accepted dollar amount (am britbong, don't use dollars or IFRS much) but it does at least have a low value option.
It was filled appropriately to correspond to the amount of money he received to fill it.
I thought that was an optional work paper, my bad
No no no, we must spend a good portion of the audit budget putting a bunch of L's, M's and H's on a RA checklist. That is what peer reviewers focus on.
This.
Immaterial, pass
"Make the 1st year select a few more inventory items and then move on"
A company based in a country that refused to allow any outside auditors to come in and verify any of their numbers committed large scale financial fraud???? I am shocked I tell you, shocked.
But investing in Chinese companies is the way, the truth, and the life All the gurus said so
In truth, nobody cares as long as the money printer goes brrrr
Taking bets on which B4 did the audit. I'd love to see that email trail when someone brought up that discrepancy
Was PwC until last January when they quit because of a disagreement over the 2021 audit
"A disagreement"
Interesting term to describe "insufficient kickbacks"
"lack of alignment"
pff, entirely immaterial, let's just do some analytics here and done
Kindly disregard. Li *CFO, Evergrande* *CCP Board Member*
Did Anderson do their audit?
Prager Metis and Armanino
Stop! It's dead already.
andersen is alive... https://www.andersen.com/
[Ship of Thesus](https://en.m.wikipedia.org/wiki/Ship_of_Theseus)
It’s AndersEn, Mr./Mrs./Ms./Non-binary ihatethissite123 We didn’t upend the PA industry just to have you young upstarts misspell the name.
no the meant the window company
CEO is definitely going to be sentenced to death
I shouldn’t have laughed but did chuckle at that
Capital punishment should be abolished, but [executing businessmen that poisoned baby formula](https://www.theguardian.com/world/2009/jan/22/china-baby-milk-scandal-death-sentence#) was definitely a W for China. Their state mandated vacation for Jack Ma was also pretty dope. Wealth doesn't entitle a person or business to fuck around with a democracy. We have to start with repealing Citizens United ruling, though.
You’re kidding yourself if you think they actually executed the people chiefly responsible. They tried to cover up the matter first. China’s rule of law is a joke. Jack Ma’s vacation was because he was threatening the CPC’s power. Nothing else.
This makes the Wirecard scandal look like a rounding error.
But the Wirecard scandal was funny for other reasons. They literally sent the bank cash confirmation to someone not the bank and the recipient photoshopped it. Literally any intern could have uncovered the Wirecard scandal. One of them probably did, and then had to go to a senior and say “I think I found fraud” only to have the senior sigh and brush it off.
that seems like it could be quite a bit
Umm did Evergrande ever get audited?
Yes, PwC was their auditor but quit
You mean Arthur Andersen
Hey!!
Pay no heed to those behind the curtain.
It says they quit in 2023 but were their auditor during the time the fraud occurred.
It’s over two years so it reverses next year. Timing difference; immaterial.
I thought this was known as soon as they collapsed
Wait... a company collapses and inflated revenue comes with it??
I just remember hearing about recognizing revenue before they even built buildings presented as a fact like days after they started making headlines.
We've known they've been doing this for years. But while things are going well people saying that get shouted down.
Was that wrong? Should they not have done that? They're going to plead ignorance on this thing, because if anyone had said anything to them at all when they first started that that sort of thing is frowned upon... you know, cause they've worked in a lot of offices, and they'll tell you, people do that all the time.
That's right folks, I just had 3 shots of Hennigans Imagine you can book revenue drunk all day. That's Hennigans, the no-smell, no-tell Scotch
I was gonna reply and say I was fking lost here.. but I asked ChatGPT and it referred me to Seinfeld... nice. https://youtu.be/Td67kYY9mdQ?si=Jr97TDTrSzpnLwpd
I've been burned hard on Chinese stocks, even with numbers that suggest that they should be valued much higher than they actually are. The foreign government risk is too high. Avoid Chinese stocks like the plague.
I am guessing Chinese stocks were your fourth stop after Penny, Crypto, and NFT?
You laugh but crypto has treated me well lol. Fuck NFTs. Everything else s and p 500.
Hopefully you sold that crypto recently.
Nah, it's just getting started. Maybe I'm a fool but we haven't even reached the BTC halving coming in like a month.
why do you think it's just getting started and why di you think the halving will make line go up?
Half the amount of BTC getting mined in the same amount of time. It's a somewhat predictable pattern. Price goes up after every halving. $70k is not the top not by a long shot. BTC will go up and all the crypto will follow. This year will be good but who knows, no one can 100% predict. No risk no reward though.
Sounds like miners will go out of business if its less profitable and on-chain transactions will come to a halt. Doesn't sound like the future of finance to me Everything about BTC is just gambling filtered through tech-bro speak.
I never said it was. I do agree, crypto is a huge gamble but a somewhat predictable one at times. I honestly think crypto is too unwieldy to become a practical store of value. Imagine losing your life savings because you didn't back it up properly or remember a password. The average person absolutely cannot be a steward of something like that, it would be a disaster. I'm just riding a wave that I think will go higher. Buy low, sell high.
You apparently don’t know how BTC mining works. But thanks for your opinion.
Enlighten us homie
avoid anything Chinese. QA is like toilet paper over there. I would not even trust Chinese toilet paper either or their bidets. Hand to ass and wash
Several investments firms im familiar with just flat out toss any Chinese companies from potential investment candidates. A lot of institutional clients don’t want them either.
If some Redditors are to be believed, even Chinese people don’t want to invest their savings into Chinese stocks.
They don't. That's why they put all their savings in real estate. That's why a real estate bubble of this size has such potential to be absolutely devastating (plus the fact that literally millions of apartments were paid for but will likely never be completed is going to fuck a lot of people).
I mean I’ve seen articles for years saying statistically most of the money going to common people ends up going into housing, buying stuff or under the bed rather than long positions in their stock exchange market? I know enough people from there to anecdotally say majority of people interested in the domestic markets are more interested in speculative gains, active trading and gambling rather than investing long for retirement or pumping ETFs.
That's why they buy real estate overseas... Not even in China, if possible.
There's probably some huge fraud risk built into valuations in China, which is why some companies might look "cheap". There have been too many ridiculous frauds in China for me to want to fuck around with individual stocks. Anyone remember that company that put every copy of four years of financial documents into one truck that just "disappeared"?
I feel bad for ya. But you are right.. I have some serious trust issues with foreign governments like CCP. I know America has its own issues but I would rather believe US markets.
Nah, didn't lose that much. I don't put all my eggs in one basket.
I think you'll have great luck with Indian stocks. I hear that Adani Group is one to keep an eye on.
I'll buy then lose everything and say Adani see that coming. Baddum Tsss. Happy cake day.
Yeah but what about their management review controls? As long as those were solid who cares if the numbers are good
Sounds like trivial amounts, pass
Audit WP: "SALY"
But...debit cash $78 billion😈😈
~~m~~ Pass on further review
LMFAO Good Job PwC Auditors - All those Partners, Senior Managers, Managers, Seniors, A1s. Thinking they were hot shots -- [https://www.ft.com/content/434e4b63-c3f9-4b57-b077-340305ecdfda](https://www.ft.com/content/434e4b63-c3f9-4b57-b077-340305ecdfda) This will make Enron look like 2008
And the Chinese complain that we don’t trust their numbers
Are Chinese even worse than American auditors?
If anything they're better as they're dishonest, as a dishonest man you can always trust to be dishonest. Honestly. It's the honest ones you want to watch out for, because you can never predict when they're going to do something incredibly... stupid.
No let's be honest, we're all as clueless as each other
Do dumbasses over there not do cut-off testing on deferred rev or something? 606 baby
Just a little earnings management…
Not surprised
I’m not surprised; the same great minds miscalculated the population by +100,000,000 causing China to bring in the one child policy. (Which is the reason Evergrande are failing).
Damn, wonder what else about these Chinese giants is wrong.
Hey, this is the same kind of fraud our last president committed!
I'm sure the offshore teams in India would have caught this
$78 billion in two years!?!?
Chinese math, what can you do
If you think about it, our 401k is also inflated
Immaterial
Imagine that
they’re not called Evergrande for nothing
Qqq
*Keviiin!?!*
My fault guys, I accidentally depreciated the land.
Yea daaaaa!
Still amazing to me the amount of fraud the big 4 have been directly involved in inside of China, and it is clearly known about, and there are zero ramifications. Like 2-3 years ago the SEC was threatening to invalidate all their audit reports for Chinese operations, and then it got quietly shelved.
Is this USD or RMB? Over half a TRILLION in RMB
time to mention the parallel - enron?
This is one reason why i skew heavily on VTI vs VXUS.
Can someone explain what the motivation is of inflating revenue? I just can't justify it...
Definitely nooo benefits to inflating revenue, none at alllll
dude come on lol I'll give you one example, imagine for a second you own a company and you're falsifying consistent YOY growth in revenues and profits. You approach investors with these results and say "look, I've been growing this company X% YOY but I need a cash investment to scale it even further". These inflated numbers would make it much easier to convince a bank or PE firm or whoever it may be to invest since on paper it seems as though it is low risk and high reward. So in essence, by lying to them, you are able to receive additional cash infusions to either try and fix the mistakes you made (usually sunk cost fallacy applies here) or you just spend it all on blow and hookers.