Media rally in support of NBR’s EY award stance

NBR’s Karyn Scherer broke the story of a major accounting scandal at EY client Fuji Xerox

NBR’s decision to withdraw from the EY business journalism awards has garnered support from other journalists and media organisations.

This morning, NBR withdrew from the awards after learning that Karen Scherer's entry covering an accounting scandal at EY client Fuji Xerox, had been disqualified by EY and the independent judge, Rebecca Macfie, had resigned in protest.

This afternoon, a raft of rivals have rallied behind our stance.

Stuff publisher Fairfax NZ was one of those who pulled out.

"We sought assurances from EY but nothing has been forthcoming, which is why we have decided to withdraw our entries," Fairfax national business editor Ellen Read said.

"We applaud all efforts to support great journalism but, just as we report independently, we need to know that any awards we are associated with are free from bias and we have not been able to determine that."

The New Zealand Herald said it had also decided to withdraw its entries from the awards.

"It is important that journalism awards are independent and the removal of Karyn Scherer's entry without adequate explanation calls into question the process at this year's EY's awards. The situation is regrettable but the New Zealand Herald feels it has little choice but to withdraw its own journalists' entries," Herald business editor Hamish Fletcher said.

Former Sunday Star-Times business columnist Rod Oram told NBR he had also decided to withdraw his entry, and RNZ senior journalist Anusha Bradley tweeted that she had decided to withdraw (and the other RNZ journalists who entered have followed suit).

“I was a finalist but, after talking with Rebecca Macfie, I’ve withdrawn my entry in the EY Business Journalism Awards,” Ms Bradley said.

Ms Macfie was a judge for the awards but resigned because an entry from NBR’s Karyn Scherer, covering an accounting scandal at EY client Fuji Xerox, was disqualified.


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20 Comments & Questions

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Uh-ohh! The way this is heading, come the day, I can see the EY boys bravely singin "It's my party and I'll cry if I want to". Tortured-looks 'n' all.
Sure to be lots of food left over.

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Yep - it's too late to unscramble this PR disaster omelette.

EY should, if they were sensible ( 1 ) grovel abjectly and publicly (2 ) send Karyn the $1000 immediately saying a mistake had been made....

PR101

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If I was a client of this accounting firm I would be shifting my business. This sort of bad behaviour is frequently indicative of other bad decisions.

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Quite shocking behaviour by this firm.

However, this is by no means the only award in this country which is far from independently assessed.

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Congrats Karyn
NZ needs more investigative financial journos

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I am putting in an application in for the EY journalism award. Figured, I have a great chance of winning since I will be the only contestant with all these withdrawals.

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The arrogance of the Accounting and Auditing profession knows no bounds. Rather than consider the pathetic results of the finance company and other NZX company failures in recent years all on the watch of the Big Four they continue to hide behind their mothers legal skirts.

After signing off Annual Report after Annual Report one would think they would be the last to resist a bit of good investigative journalism.

Oh of course I forgot. Its investigative journalism that uncovers their incompetence and worse. Snuggling up to the Directors CEOs and senior managements in order to preserve ones fees base always trumps shaking the audit tree to see what falls out.

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My hubby was just saying that if he ever needed an Accountant, he wont be calling EY. And he reckins that as a sign of solidarity, *Whaleoil* will probably return their 2014 Canon Media Award. Watch this space.

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Whaleoil was forced to remove reference to Canon and the awards altogether. The media seems to have a double standard for helping award and potential award winners.

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Is there a story brewing for next year's awards? EY = auditors of Feltex and Fuji Xerox. Fletcher Building also audited by EY.

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Much egg on face EY? What a PR disaster.

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Well done to the other media outlets. Would be nice to see those in the running for Entrepreneur of the Year walk also. The EY brand stands for nothing.

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Enter, win award, make provocative speech, throw trophy into crowd (presumably 15-or-so EY employees), go to nearby pub, put $1000 on the bar for nominees who pulled their entries.

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Party at NBR Towers next week?

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Doubt it. That's the beer fund blown to Kingdom Come, I reckon...

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Auditors are chosen by the companies they audit. It's very competitive and the audit companies often have to submit tenders to win the job. 

Medium size companies generally pay about $50k for an audit. They do NOT expect the auditors to give them grief. If there is grief the auditing company wouldn't expect any repeat business. 

Certain auditors have a reputation for being "Friendly". CEOs and directors know which ones to approach.  

Usually if there's trouble the auditors have a quiet chat with the company rather than go public. If the issue isn't resolved they just record certain parts of the accounts are not signed off. All very courteous. 

Most of the actual audit work is conducted by young, junior, inexperienced staff. It's the boot camp of the Big Four. The work, of course, is always signed off by a partner which gives the process a respectability. 

The whole process is akin to sending the goat to guard the cabbage patch. 

It's time to reform the current system. Companies requiring an audit should have to draw from an anonymous pool of qualified accountants whose identities are not known till after the draw. The audit cost should be based on the turnover/profit of the company. Simple. 

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Silly suggestion. Having a 'lucky dip' arrangement for an auditor is completely at odds with having a competitive market. And audit costs based on turnover/profit? Certainly not even the main indicator complexity in a business.

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So whats your suggestion for improving the situation?
The shareholders own the company so maybe the auditors should be employed by them rather than management and given a bonus when they discover the books have been cooked. At the moment the incentives for the Auditors all seem to be oriented towards a cover-up.

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You would have hoped that EY would lift its game from the bad ol' days of Arthur Andersen and Enron. But, nope, they've reverted to type: protecting their money-making turf as if it were hallowed ground.

The practice of auditors cosying up to their client companies, approximates the behaviour of the American rating agencies of Moodys and Standard and Poors when they rated CDOs for the likes of Lehman Brothers, Goldmans, J.P Morgan et al. The GFC quickly exposed that the AAA tranche in any given portfolio was of the same investment grade as the bottom tier (sub-prime) when the real estate market began to unravel
It's all about the Fees.

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