April 26, 2005

Four Big Consulting Companies Pay Big Settlements

Are you sure you want to spend your hard-earned money on these guys?

The Wall Street Journal reports:

Four of the five biggest names in accounting have resolved class-action litigation or regulatory complaints in recent weeks, in pacts totaling more than $186 million -- a costly few months for the firms as fallout from the accounting debacles of the late 1990s and early 2000s continues to spread.

Deloitte & Touche LLP is expected to announce today it will pay a $50 million fine to settle Securities and Exchange Commission civil charges that it failed to prevent massive fraud at cable company Adelphia Communications Corp.

In another case, the now-largely defunct accounting firm Arthur Andersen LLP agreed to a $65 million settlement in a class-action suit by investors in WorldCom Inc. over losses from stocks and bonds of the once-highflying telecommunications company now known as MCI Inc.

These follow a $22.4 million settlement the SEC reached last week with KPMG LLP related to its audits of Xerox Corp. from 1997 through 2000, and a $48 million settlement by PricewaterhouseCoopers LLP last month to end class-action litigation over its audit of Safety-Kleen Corp., an industrial-waste-services company that filed for bankruptcy-court protection in 2000.

The only member of accounting's "Big Four" absent from the settlements of the past few weeks is Ernst & Young LLP. But in January it agreed to pay $84 million to settle a lawsuit in Federal District Court in Boston over its audit work more than a decade ago for the defunct Bank of New England Corp...

In Columbia, S.C., last month, PricewaterhouseCoopers reached its $48 million settlement to end litigation in federal court filed by institutional investors in Safety-Kleen's high-yield, or junk, bonds...

January 13, 2005

Consultant Screw Ups

I've decided to add a new section to my blog to cover consultant screw ups. Do you have any idea how much of your tax money is wasted on consultants who build $100M computer systems that don't work. Well, you're going to find out. Here's the first article.

CNN reports:

A $170 million computer overhaul intended to give FBI agents and analysts an instantaneous and paperless way to manage criminal and terrorism cases is headed back to the drawing board, probably at a much steeper cost to taxpayers.

The FBI is hoping to salvage some parts of the project, known as Virtual Case File.

But officials acknowledged Thursday that it is possible the entire system, designed by Science Applications International Corp. of San Diego, is so inadequate and outdated that a new one will have to be built from scratch...

The official said its capabilities were only about 10 percent of what was sought...

Some of the necessary software is probably now commercially available, which was not the case when the project began...

Virtual Case File was supposed to provide a way for FBI agents, analysts and other personnel around the world to share information about all types of investigations, including terrorism cases, without using paper or resorting to time-consuming scanning of documents...

Reasons for the problems include weak management of the project contract, numerous hurdles in figuring out how to share often-secret information with other agencies and the difficulty of making such major changes without requiring the FBI to suspend operations, at least for short periods.

The FBI will make a final decision on the Virtual Case File provided by SAIC after a limited test of the system in the New Orleans FBI office and completion of a $2 million independent evaluation by computer experts at Aerospace Corp., whose primary government customer is NASA.

Stay tuned for more incompetence.