An auditor states that the accounts are correct and fair and they comply with the Companies act and that is all. If the company is involved in crooked dealings and has been ripped off, it will still get a clean audit report, provided those dealings and rip-offs are properly accounted for!
This will only change when the accounting profession is no longer permitted to regulate itself, and fines are put in place for negligence.
When people are hauled off to Mountjoy for white collar crime there might be a reduction in it - not much hope of this happening here though.
Remember Arthur Andersen and Enron and the shredder in Chicago?
"...True and fair view and free from material misstatement."
The directors' loans in Anglo were clearly NOT material given the size of the business and its loan book, so their omission from the financial statements is irrelevant from an accounting point of view.
There's a difference between the directors' loan account and a commercial loan taken out by one of the directors.
Auditing for alot of the big firms is the least profitable of their business streams.
Companies want the cheapest price they can get for an audit. The same firms KPMG,Ernst & Young,PWC etc earn much more lucrative fees from the firms they audit providing tax advice ,corporate finance advice etc
There is a conflict of interests going on in some cases
The bulk of audit work is done by trainee accountants and the audit partner will review the audit file and sign off .
In the case of small businesses you can be sure every transaction and balance will be verified but in the case of the AIBs and Bank of irelands ,an audit is a pretty toothless exercise.
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