in history and the pizza austria comfortable in the quarter finals as well. so they will go in with a spirit is very, very high. alexandra pop when she came back into the team, the captain. she's a massive difference, is course gold's. she does everything for the team, and i think germany will get this one done in a very, very closing called on maybe an extra time mathias break of d w. sports. thank you so much. you're watching the w news. i'll be back at the top of the hour, but stick around doc film is up next, looking at the big for accounting firms under scrutiny. america really for me and the entire team here in the newsroom. thank you so much for your company. with pleasure. it's just a thought they were great. you know

they've been called the watchdogs of capitalism, the conscience of the free market and the pin striped mafia. the big full audit is ernst and young. k p m g, p, w c. and still, with the big 4 are incredibly influential in america because they are indispensable experts with an in depth knowledge of companies and tax law . they're much too powerful to me. they influence politics and legislation with we

can't work without the big for they have an important role ordered in corporate financial statements. it's extremely important for us as consumers and for people who are in this, this to trust the information we are given that are they doing their job in 2020 the why can't scandal shook germany from bows and from the stock market favorite to fraud company. so i know never before has there been such a plumber till attacks and sing? lung audited? why can't financial results for years? without uncovering, the fraud is county signed as feler. d for mistakes from 90 years ago, which led to our profession should not have repeated us here. you don't have to be an angel in order to make a good audit. you just have to be independent. each new scandal put the big oldest

his in the spotlight. are they taking shortcuts? are they overwhelmed? or is the system at fault? thomas haggard is retired. his passion is building guitars with a pension of just under 2000 years. the former high school teacher says he is enough to live comfortably, but he's also managed to put a little aside. now, no wonder scared. i mean, if you put money in a checking account, inflation takes it, you know, instead he invested most of his savings in a promising german company. which did i did kind of musical florida. i'm inch, i'm not a risk taker,

which is why i didn't buy just any stock. even i bought wire card activity, coughed on it had seemed a safe bet. but then the companies suddenly crashed along with the chairs and started to computers. i printer afford so big that the stock would become almost worthless. i didn't think it was possible is my to really why can't lost a total of 10000000000 euros in market capitalization? raising many questions. these though is how could you go to the following? and i think that the payment processing company was fudging as well in senior year . younger finance minister blames the private auditors. should i climb on a small invest the like? me can't check where the wire card statements are true. austin managed thomas hair

get is joined a class action lawsuit against white cards, auditor clift. they carry some blame, they should have been more careful missed. but who are thomas? and the other small investors up against ernst and young or e y became the song auditor of wild card in 2011. together with p w. c, k, p, m, g and deloitte. a white is one of the big for the 4th largest accounting firms. together they employ $1100000.00 in and around $150.00 countries and they ordered the financial statements of almost all major companies. silas tells home is doing her ph. d at copenhagen business school. she's been researching the big 4 in the role they play in the economy and society for years.

auditing is something that is required. this is something that is extremely important for well functioning market economy every medium or large company is required to have its annual financial results reviewed by an independent auditor. for a market economy, it's extremely important for us as consumers and for people who are invest us to trust the information we are given. and our only weapon really is the audit ah. in 1929, the start of the great depression, companies and banks around the world rush to hide their financial problems. and countless people lost their jobs and savings, including hundreds of thousands in germany, one indies. and this was the context in which legislators introduced statutory

audits for stock companies in 1931. he's off garbage in virtual twin about harden globalization accelerated the economy. companies grew quickly informed, international networks. auditors grew to in the 1980s, 8 accounting firms dominated the international industry expanded and merged, forming the big 6 then it became the beak 5. and just a short while later, the big for k p and g, a y, deloitte, and p, w. c. in germany,

the institute of public auditors or i d. w helps influence orders in rules. the privately ron organization represents the interests of more than a 1000 public auditing firms in germany, including the big 4 ah, close by no means says the job is an auditor is clearly defined ah, desk auditors are required by law to carefully verify annual financial statements spoof mm. they are also supposed to maintain professional skepticism toward the companies they audit and follow a specific procedure ah, unnatural, perform east of us. an audit is designed to detect errors in financial statements

of today, whether due to fraud or not is irrelevant, would only be between students for coming on a company opens its books, it's business is light bare in numbers, order to see where money flows in and where it then flows out, bank accounts, marketing costs, operating expenses and acquisitions. the big of the company, the more complicated this flow of money can be ordered is generally cannot examine a company in its entirety. they instead choose an area to focus on the one where they suspect the highest risk. they compare the company's statements with the actual financial transactions to get an understanding of each of the transactions. if the order to find no fault in the company's annual financial statement, they give what's called an unmodified opinion, a seal of approval for the company. and

the all is verdie. the wire card was trusted for many years. and to this day, e. why maintains it audited why i can't to the best of its knowledge and according to protocol, went by the national to name list. so him pushed it if companies like that long and auditors don't notice it's over, because then we can no longer rely on the very foundation of the business live. namely, the number is my philosophy. ah, fabio demise. he co chair, germany's why cod parliamentary inquiry committee together with parliamentarians from all political parties, democracy began investigating the german companies collapse and october 2020 the committee questioned a $110.00 witnesses of and 9 months. one of the key questions did e,

why make mistakes? the why can't, scandal was not the 1st time the big old just had to face criticism for 5 years. horizontal boring machine company flow, tech inflated its results with fake sales. and k, p. m g didn't notice then either leading to damages of more than 5000000000. toich mocks, the biggest white collar crime ever in germany. with in the u. s. energy company, enron inflated its profits for years. it's ordered to arthur anderson was one of the big 5 back then. and once again at the auditor failed to detect the fraud and wrong filed for bankruptcy in 2001 and senior anderson employees destroyed company documents without permission following the scandal. the auditors surrendered its license to ordered listed companies,

but it never recovered and was eventually dissolved mm. in 2008, it was investment bank, lehman brothers, filing for bankruptcy. lehman had used accounting tricks to hide its financial situation for years. and he was kept approving the cookbooks, ah, the bell markets are in shock. the stocks are plummeting. lehman brothers eventually collapsed and a massive debt in 2008, triggered the largest financial and economic crisis since the 2nd world war taxpayer money was used to save banks around the world. $59000000000.00 euros in germany alone escaped diesel for an certain failure from these are isolated cases of corporate fraud that auditors failed to detect at so few and each cases

one to many aust scenes. but can we say that because of these 10 scandals, the 90 years auditing tra, which checks thousands of financial statements every year. how does that work was performed? we should order is really help uncover corporate scandals on possible explanation is that there are conflicts of interest companies hire and pay their auditors themselves a practice based on a government assumption that companies have an interest in being properly audited. then the vote trust is crucial. east div from auditing booths, the public trust in a company on its finances in i'm on use vote. truffle intern named staton

with honors, inca is an expert on financial statements and a consultant. she says the fact that companies pay their auditors is problematic, or when eliza shouting to was still in the chin, the sign bud loosely agree on the deadline and i don't meet it, increasing costs and then declined. might say, i see that you stay within it or next year will hire another auditor. he makes 99, put them on swan del to is all too familiar with this pressure. he worked as a junior auditor at p w. c in luxembourg for 2 years already on the graphical shows, basically with an auditors to something feel it's against his interest to speak up,

especially if they don't want to correct it deducted. it's impossible to audit well m and ab m and as an additional fact, a complication. the auditor company relationship next to auditing. the big 4 also offer consulting. they advise clients on digitalization, sustainability, and taxes. the big 4 are incredibly influential in a market economy. they have a lot of services that really impact how business is done. sila styles, home says this creates yet another conflict of interest. you cannot see someone as a your client and then also investigate them. critically. as the regulator, you have to be on one side or the other. the big fours call business use to be

order thing. but now at any accounts for around a 3rd of their revenue, around 2 thirds comes from consultancy. then he's mentally vice. if i know the auditing market is limited, and fees are essentially stagnant, and consultancy is the opposite. that then it makes sense to offer the latter, using it not to 1st end date, does unlike them, and so beaten virtuously here at folk c kept valley. tate endeavor, trots goofing square traffic when he moved to not doing well financially. insurance quality at the auditing firm. i'm in that i'd like to add such doing well financially also secures financial independence. not pinkies. i'm the only one who isn't financially independent and is probably most likely to look via the way him for a client, their auditing, when they shouldn't have been a neat tune. zoe, to profit

made from consulting, and she was, auditors can remain independent, at least according to class peter norman. but his theory true. i ordered his independent from their clients. another form a p w. c. employee shared his experience in the us. now, robot out worked as an auditor at p w. c for 18 years. the problem is that many companies that i experience didn't have the competency in house to document the complexity of the transactions that they were doing. but the, instead of hiring 3rd party consultants to do that for them, the auditors was doing that for them. because again, once you do that, management likes,

you will be auditory not supposed to do that because the auditor should audit if the other part ends up doing it. then who are these? the auditors bought out repeatedly reported his findings to his superiors. famous. i thought that they were part of those things internally in my performance ratings start to get annually decline, and i was not allowed to work on jobs progressively. this is how our water says it. records shows that his superior said bottle was too critical of his client's management and to high of comp auditor that are more friendly, less inclined to give negative control opinions which men to that if we alone, what are the one that we're giving adverse control opinion when the other 3 did not

. we will not have been high ever been the market. morrow bottle was fired in 2017 . his suit for reinstatement was dismissed by california court in august 2021. ah, michelle destroys the certified public accountant and chairman of the association for medium sized company auditing. he says the big for forcing small auditing firms out of the market. just one of the reasons why he's been campaigning for years for strict a separation between odyssey and consulting her values and solstio, not pinkish child's or you just can't phrase what a fact consulting has on the independence of the auditors. mission for falling invasion and forced us in proof of hunch. post moore with following the financial crisis,

the topic was put on the easy, which ended in 2010. e commission and michelle banging also felt the independence of auditors was at risk. if you so is it healthy for the same firms to be auditing and consulting into quasi docile context or is complete independence even possible in that context? i'm all bushy dominance calls are often when we hoped what he said would become reality. veterans criteria benet wanted to strictly separate auditing and consultancy. he also said company should be required to change orders every 10 years, or as for the and a course a lobby. what followed was a lobbying campaign which michelle bonnie, a correctly described as the biggest campaign ever in brussel tub san diego

was the coordinator of the e committee on economic and monetary affairs until 2021. he saw lobbyists working for large auditors exit political influence in brussels. the reading a to list within a child pagan, they're talking to the decision makers. and they're meeting them early on him and when it's crucial, as of at the commission, your at the ministries of the members state home in the, in hattie anything remained of michelle danny's ideas. member states themselves got to decide which e orbiting reforms. they introduced me as a specific date get everything was watered down. justin established fresh, lorden gemini, introduced several exceptions. auditors could still act as consultants to companies . they audit. and they could order to company for longer than 10 years. how this

reform developed reveals another potential conflict of interest new this we know the big for regularly getting lucrative consultancy contracts with german ministries in san offloading, e y, and even after wire card or not, these consultancy contracts still exists, will begin by a few problems. these problems show that the best people no longer work in the ministries ishmael, the best lawyer to hobble this problem also applies to the oldest, a watchdog known as a pos in germany. a period checks with the order is maintain their independence. as a half, it's employees used to work at one of the big for so

if you have a system where there are 4 organisation that have penetrated the government institution that are supposed to oversee them, they are essentially approachable. governments often have to rely on external experts in the big for a very happy to offer their expertise skips it in peak for when it comes to the big for there's a kind of conspiracy theory about house them shady power influences everything buys it's but that's just part of a desperate search to find a physical power not behind global capitalism include knocked her in global is yet . and capitalism was open. but they are obviously example windshield players. misty, got to i was like a nomic power gives them political weight. ah,

for antoine dell to getting a job or the big fall was a great opportunity. he started working for p. w. c in luxembourg in 2008. i did associate, i'm interested in numbers and i'm analytical. you thought this was a good fit and pull it up. he believed auditors could positively impact society. some it's year, very important for auditors to be independently, so to kill us societies rely on financial data being corrected at the national sir . p w. c is demanding employer with long working hours and high pressure. i have a time antoine adult who began to understand how luxemburg worked as a financial center in the demo system. so digital fits mormon lamoya tape as good did the some audits really shocked me because i was investigating empty shell

companies called no implies no revenue. her neural economic activity and luxembourg, collectively taken and were supposed to create transparency lifted up vomiting. but what's the point with empty shell? so they could it either and if i could it. so that was a non to until to became disillusioned about the societal benefits of working as an auditor. a pete of you said he lost his motivation. after 2 years he resigned that before leaving, he came across confidential tax returns. i showed that luxemburg glued international companies with deals tailor made by p w. c. that slashed corporate taxes to less than one percent. that's english gets down bys and every tax trick, just short of illegal is being used to move profit made in one country that high into another country to be taxed at a lower rate in an unknown land. first, oil,

dragonball done not foolish disturb last only to the ghost. p w. c. even prepared tax, rollins with the letter head of luck. some folks tax authorities. government officials just had to sign price waterhouse coopers, r o t, w. c was practically a division of luxembourg financial administration. it's unreal, wendy, on tanelle to a share, the documents with a french journalist. and he was then charged by luxemburg authorities in 2014 for leaking documents. bought in 2018, he was recognized as a whistleblower. he w c isn't the only firm selling such tax strategies they bring in

a lot of money for k p m g e, y, deloitte, and other tax consultants all over the world. yeah, of course that is some extra spice through the discussion and the big for particularly when you think about how important they are for of functioning maggard economy. it's little bit worried that they are also it the ones who undermine the society in some ways, by showing it businesses how they can practice it takes aggressive us according to the european commission, the e. u loses up to $70000000000.00 euros a year to, to corporate tax tricks. around half of the use annual budget. the glister shop biggest damage is that people feel like some people are above the law and those who get expert at biasing, have an international network. and don't pay their taxes on this low as the entire

systems legitimacy for the schism to store this team, their common z in any z. ishmael, z to a, to one vanderbilt, a smaller, vaster, difficult area. he to, when is that morally objectionable to use tax laws put in place? but the legislator who is the sovereign it skibo does as yet is vain. zips, gazette st up. tax competition also causes tax avoidance. because images where does an incentive for some is the strategy for someone else. and consultants are supposed to tell their clients about the various opportunities when it does, i'll destroy bought or would have a trust with anita if it's a tax consultant or auditor. hm. my, i don't do that is i can, my clients can later say i caused them financial damage vide because i didn't tell them all the options. you would need all the legal options legality to reduce their taxes. it would, you want managed, wireless skipped but the big for aren't just advising their clients.

what is very problematic is that many are also involved in legislation and other things in ministries zaleski will alone being retarded. and ministerial every country has its own tax laws, and the resulting complexity leads to a need for expertise exactly what the big for, and their international networks offer via zene by the but i to get one to niemen, var consulting allows us to see where the problems and the tech systems are one of these, amino, and retail politicians, the government, the finance ministries, to you on the parliament, parliament of maxim this company. so it's okay to speak with experts, even business experts. but when they're practically co writing laws, without the public or even parliamentarians knowing that's

a problem. so somebody isn't problem. string 2021. a why order has come into scrutiny by the why can't parliamentary committee team of origin was appointed especially investigators. the committee asked them to review a white wire card ordered. the findings was summarized in the back report, pulled up confidential. it was late to some journalists. the felix holter man worked for hand split a gym and financial paper and had been following the wire card case for a long time. his disc also got a copy of the one report of amber released 50. after that,

if i'm back report is the 1st public audit of one of the big four's work, that the findings are crucial and given us fish. the investigators looked at records from 2016 until 2021, and tried to ascertain with an e. why should have uncovered the fraud early? ah, i kind of, and in fact, in 2016 why cards bought a dubious indian payments firm for a great deal of money and suspicion arose that wire card managers made money off to deal with in response a my started project bring a forensic orders according to the when back report, but there were problems who's the exceeding from by wire card management. i didn't sufficiently explain why they had overpaid for the takeover. the one that proposed introduced

a letter from march 29th, 2017, written by the e. y auditor and addressed to the chairperson of white card supervisory board to todd. so found his appointed mission, actually crunch etson if these points are not conclusively clarified accident. yeah, there may be a modified opinion for the financial statements. we would also like to inform you that we will decide whether we can continue to work together based on your reaction to this letter. e, y is threatening to not give an unmodified opinion or bygone to withdraw from the auditing mandate parked would this would have been a disaster for why a cart. a modified opinion alone is enough for investors and banks to lose trust. but it would have also been a bit like realty for the auditors. it never got out even the week after this letter. and we don't know what happened during that time,

e y delivered at the opinion. on modified the did e y received the information they needed. especially investigators said the following in the report. the information include variable and written explanation by the management board. a proper clarification of the open points cannot be found in the documents then you should be, don't even want to see if i'm just having the board confirm thing, then there's no point. then i may as well skip it. but i need to maintain a skeptical attitude and assume something is incorrect. ms. finch. this is the only time e y spotted problems at why a car in the supervisory board notes which handles black obtained the auditors said the following in 2019 to tat 5 under

into quote, doubts about the management's integrity life as a way down the boards, integrity is pretty much the strongest statements. an auditor can make inclusive about depression can put in 2019 e want again gave y a caught and unmodified opinion, but they did refer to fraud investigations against wire card, employees and singapore, in their final report. e y said the following in a written statement. very few annual financial statements of tax companies have contained such statements. this alone shows that this was an unusual measure. ah, but the orders, his comments received little attention and wire card skillfully concealed its true value in the final report. as of emily's dividend, if you look at the balance sheet,

you see 2700000000 euros in cash and cash equivalence. nothing about how this also includes money in escrow went and did that with the company kind alliance or monsoon. on the financial statement, it looked as if why a card was swimming in money and sent young had an id through the years. it was auditing has armed ernst and young a failed to obtain an independent confirmation that these phones existed. the desk instead, you why relied untrusted useless. in a written statement, e y said the complex criminal web was designed to deceive numerous stakeholders, including investors, bank regulators, supervisory boards, auditors, despite their diligent and extensive efforts. e y had become suspicious, but it seems they none the less continued to trust my accounts management board in key moments and such if i e. y relied on board statements while

simultaneously doubting its integrity by ford, even as an external observer, hannibal, boston, what makes you wonder how e y could have issued audit certificates all those years wanted to this day, it's unclear why e y auditors did not heed. the many warning signals, the damage to their reputation is considerable. clients such as commerce bank to which a telecom in k w, a government bank ended they ord seeing agreements with e, y. in 2020 munich state, prosecutors opened investigation into the pot and has it in one order to wire cot. june 2021. the parliamentary inquiry committee presented its final reports on why i caught these up between this broad should have been stopped

early on. ladies and gentlemen, again, bullying with young law coolish. the audit is should have verified whether the 1900000000 euros one 3rd of the balance sheet was actually in a philippines escrow account of the lump sum of my employment condo. in the philippine leaked, you open side e wise high earning auditors failed to be in because according to the committee was not on the order since he failed to fall the case exposed or radical failing by authority, especially by boffin might have off in boffin is germany's financial supervisory authority, responsible for monitoring small banks, insurance companies, and securities trading ah. when in 2019 fresh fruit allegations against y cod caused a steep drop in its share price, barf in band investors from betting against the company without verifying whether

they were problems with $1.00 current balance sheet. the financial regulated claim to tax was outside its responsibilities. ah, if i'm not responsible for something, it's not my fault and lost all of shelter. the finance minister at the time and the head of baffin, he held that position from 2018 to 2021 shalt told the parliamentary committee. he didn't feel baffin had protected. why can't thought he conceited? the state controls to prevent and detect financial fraud or insufficient? and this is a service dish to be and that's why it is all important for us to do everything by ensuring our powers and rules are strong to prevent a repeat and continue pursues

the german act to strengthen financial market. integrity or fisk was passed in june 2021. the law was supposed to help strength and confidence in the german financial market. and placed more comprehensive rules on auditors. with fisk, germany implemented the auditing reform for post by michelle. bon, yay! in 2011. the obligation to separate the auditing and consulting for major companies was taken seriously, which is a now no longer allowed to audit, a publicly traded company for more than 10 years. and auditors also have more liability related to audits under civil law. listed stock companies must have affected internal controls and baffin has more power and is directly responsible for monitoring balance sheets.

descript i need is some parts of this law a useful, but when it comes to auditing, it doesn't go far enough. i would have liked a stronger separation of auditing and consulting tunnel for perform bottle. vention is skipped in cisco. i need to go to and the physics has some good points the but it won't improve the quality of audits staggered in the end. the fisk may lead to an even more concentrated, ordered market. more rules means more bureaucracy, which often goes beyond the capacities of smaller firms. san diego that says the fiscal doesn't address the actual problem slits at yet, and it shows introduced strict of public supervision above in the 1000 the font. but if the thousands of auditors have conflicts of interest and i'm intestines.

conflict like then just adding supervision on top is attacking from the wrong and i english does viet from pipes in nails. a globe of his organs were early sign. let's be honest. non law can always prevent a wire card from happening. and in fact, we way i can't definitive finan cook was an opportunist. she missed thomas haggard is disappointed. the law hasn't restored his trust venice sean, who is does money in missouri year and since they say pensions are safe and that everyone should fend for themselves, done, the government and politicians have to make sure that order to keep an eye on things organ does uber charge prove her. oh will please, i had fraud and before it happens in full head, he didn't talk of all she's kind ah,

what would need to happen to that to be guaranteed by would hitting i believe that in every country the, all the thing job should be done by the governments not by private companies, private corporations, as always, the for profit as it goals. and the conflicts that exist as far as independence, it will never be solved. fabio did mossey would like to see radical changes to the market system. the paulson voted team and consultancy need to be strictly separated, isn't actually quite so law. we need to break up the big plays and we need to require the inclusion of mid sized auditors from middle spanish and performed on him when it comes to incorrect balance sheets. class pete, and now mom says the company's a primarily responsible of the supervisory board has to ensure

a compliance if the board isn't doing its job, authorities must intervenes and buff and needs more. right. and how much public involvement you would want in any solution and much, much market based involvement, you would want in any solution. that is a political question. why a card shows once again that audits cannot office to student protection against financial fraud. markets need reliable monitoring free of conflicts of interest. sh, blue or terror from corruption in the nepalese village of coffee. they are supposed to be subsidies for victims of climate change,

but any of the funding is reaching them. where is the money going and how can effective with 3000 in 30 minutes on d, w. farming and can without harmful chemical pesticides, not feasible. you don't, you can produce enough of it to be able to do it on cbs forming enterprises and become really while the politicians are still debating. the 1st farmers are very successful. we were discovered to real recon now la nor did i not do or wondering that these no town full food, our cost or my pico africa, 90 minutes on d w o. in india,

a land of contrasts of ambitions of inequality. 75 years ago, mahatma gandhi peacefully led the country to independence. what has remained of his vision? where does the world so called the largest democracy stand? ah, where is india headed? this is the moment to unleash on, on violet bars, on these legacy. start august 6th on the w. ah, the state of the news and these are our top stories, european union energy ministers have agreed a plan to reduce the blocks dependence on russian gas. moscow has announced it.