Who checks the bean counters?

 

The majority of the flak following the failures in the global financial system was largely directed at one sector i.e. the banking industry.

 

One group of participants remained largely unscathed for their part in the train wreck, the auditors. It has taken time to percolate through but now the auditors are coming under closer scrutiny.



Tesco who recently reported a £6.4 billion loss advised that accounting irregularities were in excess of £326 million in its accounts signed off by auditors PWC. It is hardly surprising that Tesco as it tries to repair its reputation and image has sacked PWC.

 

Auditors are in a very privileged position and their integrity is paramount.

In the US authorities have brought criminal and civil charges against former senior partners at accountancy giants KPMG and Deloitte Touche over alleged insider trading.

 

However it is not just about negligence or illegal activity, there are many instances of conflict of interest such as taking on consultancy work for clients and becoming too cosy with management teams.

 

At the lower end of the scale it is all too easy for companies to bully the young staffers sent in to do the grunt work. For example what chance has a newly appointed auditor walking around a factory warehouse to adequate value stock?

 

In reality they have to rely on the company for “valuations” and this can result in a totally inaccurate picture being presented.

 

There are many instances when faced with a strong (bullying) senior management of the company being audited that the auditors end up signing off on a “nod and a wink”.

 

The validity of a company's accounts reflects both the integrity of the company which is being audited and that of its auditors.