I've been talking to a lot of people this week about executive remuneration and about how its calculated.
A contact suggested I go back to the report written by the Bankruptcy Court Examiner on New Century, the giant sub=prime mortgage company that went bust in the US last year.
The report raises some interesting questions about the relationship between 'accounting failures' and executive pay.
However, it was a quote from the engagement audit partner at KPMG that caught my eye.
The report from the US bankruptcy court quoted an email from the partner to a junior member of staff who had raised concerns about certain accounting practices at New Century.
The partner is quoted writing: 'I am very disappointed we are still discussing this. As far as I am concerned we are done. The client thinks we are done. All we are going to do is piss everybody off.'
I couldn't help but think, well, yeah, you will piss someone off, but then that's emphatically the auditor's job - ask brutally difficult questions.
And then it occurred to me, who did he think the clients were? I believe he thinks the company directors are. However, I can't conclude that what he should have been thinking is, what's the best thing for the shareholders here? It strikes me that the offending email embodies as a disturbing conception of the role of the auditor.
The scary thing is that KPMG in the US stands accused of contributing to the failings at New Century (denied by the firm), including accounting failures, which in turn contributed to performance bonuses for directors being 300% above what they should have been, according to the report.
My worry is that if it is a widespread belief among auditors that they are working for company directors alone, and not there to 'piss everybody off' on behalf of shareholders, the profession has moved onto very unstable ground. People will be entitled to ask whether more bonuses have been won on the back of 'failures' contributed to by auditors. And then I think we may be back at a point in 2001 (you know the one I mean) which we should have left behind long ago.
Of course, we have no evidence that this awful misconception is widespread, and let's hope its not. But it is something audit firms need to monitor and keep in check.

Click here to read the full report