Have noticed a lot of noise lately on Accounting firms, but tend not to hear about Consultancy issues. Why is this? Are they more protected from a liability point of view?
Have there been any major scandals where consultancy firms have offered advice at the detriment of the client?
The list of scandals around MBB goes on and on. Bain almost got bankrupt due to mismanagment in 80s and was saved by M Romney, McKinsey has Skilling, Gupta, South Africa, Swissair...
Scandals around accounting firms are bigger and more frequent because they are much, much larger and they are more of a household name. MBB, while extremely popular with MBAs, are relatively tiny
Agree with Anonymous A (side note - why remaining anonymous when you stick to the facts?). There have been serious issues from time to time. It looks like McK has had more than its fair share of such scandals lately, but I think it is at least in part due to the fact they are the biggest and most recognized consultancy.
One of my former mentors was actually a partner in the Houston McK office during the Enron heydays, though he was not involved in that particular assignment. Years ago, he admitted that the main partners on that project simply drank the cool aid along with everyone else: What Enron seemed to do was so amazing that even some of the best consultants in the world just went along with it. This scandal drowned the top audit company at the time, but McK only got a black mark and moved on; even these partners were able to remain in the firm.
You see the same thing in South Africa currently, with McK and Bain being implicated. Sure they will get black marks, but odds are they'll be fine long term. The difference between an auditor and a consultant is the auditor has to sign, while the consultant only provides advice.
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