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April 03, 2014


Mike Corcoran

How about stress tests to make sure partner capital is sufficient in a regulators mind?

Paul Gillis

The Big Four are public interest entities. Although private, society has a keen interest in making certain the firms are solvent and capable of long term survival.

All PCAOB registered firms should be required to provide audited financial statements to evidence their capability to serve as auditors of public companies. That includes the foreign affiliates.

Jim Peterson

Thanks -- but the difficulty with the comments above from Corcoran and Gillis is that the existential problems that confront the Big Four are not susceptible to either evaluation or mitigation, neither by "stress tests" nor by published financial statements. The types of short-comings in business models that would be revealed, for a bank's capital under exigent conditions or for degraded performance that would call for a going-concern opinion, are not what would kill off a Big Four firm; it's the indictment or the "worst-case" shock of a several billion dollar litigation hit -- neither of which fits these proferred "solutions.

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