Accounting firms do not always garner headlines, and when they do, it tends not to be for good reasons. Things changed a little bit in this realm over the last week, though, as Mazars USA LLP ended its association with former president Donald Trump and his business interests while saying that it could no longer vouch for a decade’s worth of business statements.
Whether this accounting firm getting such attention is for good reasons or not, well, that can be (and is being) spun in both ways. I will try not to cast any such judgment in this space. Instead, I just want to look at this from the accounting perspective.
What seems clear is that Mazars received some information that led it to believe what was reflected in their financial statements for the Trump Organization was not a complete, accurate portrait. This speaks to a key cog in the accounting machine that the numbers reflected must be honest if they are to reflect anything of value. There are many key questions here that still need to be answered, though, before declaring how egregious any actions surrounding these statements may be.
The obvious first big one is what did Mazars discover that affected how it views that decade of statements? Some still large questions follow that one, however, as to whether this was information that Mazars knew (or suspected), if they were given outright false information, or if there was information that should have been shared with them that was withheld.
This is because the reports that Mazars did are compilations, which essentially means that they are largely based on information provided to them by the client. They were not audited in any meaningful way by Mazars itself.
What may be key to figuring out what is going on here is that Mazars did not simply retract (and then presumably follow up by correcting) the compiled statements. It also ended its relationship with the Trump Organization. This would seem to imply that there was a breaking of trust. It’s possible that in conversations with a client, an accounting firm could discover that an honest mistake was made, but it can then be fixed and be correct moving forward. That is not what happened here.
So even in this quick summation of what is happening, we have hit upon honesty and trust, both pretty strong concepts. Again, I don’t want to cast any judgment on what may or may not have happened here or cast blame. For it is certainly plausible that this situation may just have become too much for Mazars and it wants to step away. Instead, we will wait to see how this is judged by those whose job it is to do so. I will, though, state how important those concepts are to what we do and that clients, accountants, and any third parties observing the work done between those two, deserve to have things be clear and not lay in gray areas, and we commit ourselves to accomplishing this.
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