Bank showdown with auditors looming

The worst job in the industry right now: Auditing the books of top banks, the likes of Citigroup and JP Morgan Chase. The stakes are really high. The New York Post notes that little-known law, passed in the spirit of Sarbanes Oxley, that now prohibits banks from indemnifying auditors against mistakes. Most other companies can do this, essentially holding them blameless of mistakes that leads to suits. So if the accountants botch, there could be some real costs. Unfortunately, there are lots of hard-to-value assets and related balance sheets issues that will not easily be grappled with. Auditors will be in full cover-your-butt mode--AS5 be damned--and might press for additional write downs and other measures. Signing off on controls will likely not be easy.   

For more:
- here's the New York Post article

Related articles:
- Sarbox and Merrill Lynch's audit committee
- Bar rises for internal auditors