'Big 4' auditors. Will they be next on the chopping block?
Discussion
We already have a minnow on the hook tonight as Oxford University Press are fined £2.2m for bribery in Africa and get handed a ban on doing business with the World Bank for three years.
https://chronicle.com/blogs/global/oxford-universi...
https://chronicle.com/blogs/global/oxford-universi...
fandango_c said:
Eric Mc said:
But the larger companies' accounts are all signed off by auditors - who are qualified accountants as well as being auditors.
Not all auditors are accountants.....I know there are lots of other types of auditors who fulfill other types of audits - but we are talking here about signing off Auditors' Reports in limited company accounts.
Eric Mc said:
I know there are lots of other types of auditors who fulfill other types of audits - but we are talking here about signing off Auditors' Reports in limited company accounts.
This is the first mention of the sign off of an Auditors' Report, so no.Any audit of a large insurance company will involve qualified actuaries and qualified accountants.
fandango_c said:
Eric Mc said:
I know there are lots of other types of auditors who fulfill other types of audits - but we are talking here about signing off Auditors' Reports in limited company accounts.
This is the first mention of the sign off of an Auditors' Report, so no.Any audit of a large insurance company will involve qualified actuaries and qualified accountants.
If our auditors (not big4, but top 20 mid market) were anything to go by you'd have to park an elephant with a cheque for £20m to cash, written off to fish tank management before they sniffed anything as being slightly dodgy.
Typically you see an audit senior at the start and end of the audit, and the auditors spend all their time looking at ways to tick their boxes. What they specifically don't do is actually check the risk points. Sabanes Oxley Sir? No, don't worry you're too small so we don't mind if you can manipulate the system to read whatever you want.
there should be a requirement for a company to go through enhanced audit every 4 years by an auditor who knows the first thing about business. At the moment you have kids who know how to read a P&L but no idea what actually causes movement in the P&L. Biggest problem one year was that we had 500k less cash in the bank than the year before! they thought we had knicked it i think. twunts.
Typically you see an audit senior at the start and end of the audit, and the auditors spend all their time looking at ways to tick their boxes. What they specifically don't do is actually check the risk points. Sabanes Oxley Sir? No, don't worry you're too small so we don't mind if you can manipulate the system to read whatever you want.
there should be a requirement for a company to go through enhanced audit every 4 years by an auditor who knows the first thing about business. At the moment you have kids who know how to read a P&L but no idea what actually causes movement in the P&L. Biggest problem one year was that we had 500k less cash in the bank than the year before! they thought we had knicked it i think. twunts.
PugwasHDJ80 said:
If our auditors (not big4, but top 20 mid market) were anything to go by you'd have to park an elephant with a cheque for £20m to cash, written off to fish tank management before they sniffed anything as being slightly dodgy.
So what are you saying? That you're hiding things from them which they haven't spotted? The auditors are not there to second-guess managent. They are simply there to conduct a disciplined review.For instance, look at Northern Rock. There's nothing an auditor could do to stop the insanity of the management. It was the precious City investment managers who thought Adam Applegarth was running a viable business model, not the auditors telling them he was.
Eric Mc said:
I was talking about limited company audits as, the last time I looked, banks were limited companies - and the point was being made regarding the sgning off of bank accounts by auditors.
You were talking about what you were talking about, and you're the only person to mention sign off of companies' accounts.I was talking about auditors as per the OP.
Ozzie Osmond said:
So what are you saying? That you're hiding things from them which they haven't spotted? The auditors are not there to second-guess managent. They are simply there to conduct a disciplined review.
For instance, look at Northern Rock. There's nothing an auditor could do to stop the insanity of the management. It was the precious City investment managers who thought Adam Applegarth was running a viable business model, not the auditors telling them he was.
what i'm saying is that auditors are rarely competent enough to conduct a disciplined review. For instance, look at Northern Rock. There's nothing an auditor could do to stop the insanity of the management. It was the precious City investment managers who thought Adam Applegarth was running a viable business model, not the auditors telling them he was.
the areas of genuine risk (where things can actually be manipulated) are invariably the boring bits that the spotty 19yr old gets to check.
Speak only from experience as a CIMA accountant running an audited SME company.
PugwasHDJ80 said:
what i'm saying is that auditors are rarely competent enough to conduct a disciplined review.
the areas of genuine risk (where things can actually be manipulated) are invariably the boring bits that the spotty 19yr old gets to check.
Speak only from experience as a CIMA accountant running an audited SME company.
Absolutely. I've been involved with audits in my job before, it was "Big 4" each time, but I don't recall which ones.the areas of genuine risk (where things can actually be manipulated) are invariably the boring bits that the spotty 19yr old gets to check.
Speak only from experience as a CIMA accountant running an audited SME company.
They always sent the graduates down to us to do the audit. They had a list of things to look at, a sampling scheme for the invoice/credit numbers, and if there was an issue such as a missing invoice or credit authorisation they'd make a note in the file.
Since I was in charge of invoicing I'd generally end up sitting with them for a few hours. Every time they came in I would find a couple of howlers that had slipped through our own internal procedures, and they never, ever spotted them because they'd been told specifically to not look into anything in any detail.
Needless to say I got everything straight as soon as they had left, but it always made me wonder how far I could have taken the piss with it before they'd notice shenanigans.
Eric Mc said:
And you are correct. Auditors are very poor at truly understanding what is going on. It is tremendously easy to pull the wool over their eyes.
I must admit to being more surprised by what doesn't get asked by our auditors than what does. I get the impression most of them have never been anywhere near a "real world" business in any meaningful capacity.Ozzie Osmond said:
DJRC said:
The trouble with most auditors is that they *are* accountants. Part of the disease.
Brilliant. Since it's the accounts which are signed off as audited it's actually not a bad starting point. Or perhaps auditors should simply be Daily Mail readers?I don't for one second buy the modern mantra that any opinion is a valid opinion. If we accepted that then the earth would still be flat.
ked up with just one customer.Eric Mc said:
They always use the cheapest (i.e. least experienced) staff they can for the leg work.
We have one of the big 4 here at the moment. I was in the coffee shop queue and genuinely thought we had an intake of school leavers. Nope - all audit staff, all being billed to us at decent day rates.Edited by Eric Mc on Wednesday 4th July 00:07
They routinely come round to ask questions about processes and procedures and honestly - they don't have a scooby about anything if it isn't on their crib sheet. Not enough time served in the real world.
Whilst the blame could be laid at the auditor's door, I think many firms would probably prefer to have the B team doing the audit. Less chance of anything being uncovered.
It seems like a good excuse to post this pic:
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