AIG And A Voodoo Are Walking Down Wall Street
AS AIG, the world’s largest insurance company, continues to work its way through the best part of $125 billion, courtesy of the US taxpayers, its auditors PricewaterhouseCoopers must be nervously wondering whether they will suffer the same fate as Arthur Andersens, the massive accountancy firm destroyed by the Enron debacle.
PWC has covered its back to a certain extent; it insisted that AIG’s accounts disclosed a material weakness in the valuation of the credit default swaps.
Analysts are arguing that AIG losing so much money, so fast, could only be a result of massively over-valuing CDS; we’re not talking about a billion or two but possibly hundreds of billions.
If the gap were that big then PWC could find itself in court; no wonder the world’s accounting standards boards are not happy with the voodoo accountancy being urged upon them by the lobbyists and some of the more hysterical pols.
I’ve been on about voodoo accountancy for so long that I thought I’d give someone else a chance; as Janet Tavakoli, reported in the New York Times, says:
‘“When investors don’t have full and honest information, they tend to sell everything, both the good and bad assets.”
Couldn’t have put it better myself…
Posted: 30th, October 2008 | In: Money Comments (3) | TrackBack | Permalink
