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post Posted: Apr 12 2018, 08:50 AM
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In Reply To: blacksheep's post @ Apr 11 2018, 10:27 PM

Yeah nah, the auditing companies will play the odds and continue doing what they do. What are the chances of the regulators catching an auditor doing "poor work" and what are the chances of that unlucky auditor copping a maximum fine. I see the big 4 alone had revenue in Australia last year of $7b, and that some of their biggest customers here in Oz are the government departments and agencies that are supposed to be monitoring them.

The core problem with auditors is that they have to sing for their supper, and if they don't please the company they are auditing then that company will look elsewhere for future audits: if that means that they look the other way when companies misbehave then that is what they will do. Or to put another way, auditors, just like any other professional, are bound to primarily service the party that is paying their fees, so of course auditors will make every effort to deliver what the client wants. Certainly with public companies at least auditors should be appointed, and paid for, by the regulator and should have fixed term non-renewable contracts.

Also regulators need to sort out the protocols for audit companies that provide other additional services. Many years ago now but I have personally seen a big 4 audit firm offer audit services for virtually nothing on the proviso that the company, a major company worth billions of dollars, also use its other services (IT, human resources, financial services etc). Just as it is dumb to allow banks to expand into financial services conglomerates I think it is dumb to have allowed auditors to mutate into broad professional services behemoths.

"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

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post Posted: Apr 11 2018, 10:27 PM
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Seems the UK is cracking down on auditors who perform shoddy work-might be a good time for authorities here to do likewise

Auditors could face £10m fines under tougher punishments for 'poor work'

Tim Wallace
9 APRIL 2018 • 6:14PM
Tough new punishments are on the way for bad or dishonest auditors in an effort to crack down on shabby performance in an industry wracked by scandals.

“Seriously poor audit work” will land big four auditors with fines of £10m or more, the Financial Reporting Council said.

The accounting watchdog wants to improve incentives for good behaviour and show that those who perform badly do face consequences, following a series of scandals from the financial crisis onwards.

These have seen the biggest names in audit appear to give a clean bill of health to giant companies, only for the businesses to collapse shortly afterwards – yet the auditors faced no or little punishment.

The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington

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