RE: auditors12 Nov 2015 14:17
jollyspecs
The first thing to remember re. audit was that ' Auditors do not take responsibility for the financial statements presented to them, on which they form an opinion'
The responsibility for the financial statements presented to the auditors lies with the company being audited. This statement is always prominent in communications with the client and in the audit report. I understand it is still a requirement to ask this question of the management in writing before the start of audit.
If certain senior directors conspire to manipulate the financial statements in a deliberate and systematic way it can be very difficult to detect, particularly if this has been the case from the early days of operation of a company.
Change of auditors rarely brings misdemeanors to light as the outgoing and incoming auditors will usually meet to help the changeover and audit partners are usually ok with this as it helps in the initial new audit, and unless there is a particularly keen audit team leader or senior they will check and test the info they are given but not look at the statements forensically, unless it is something that comes to light through the presented financial statements.
Hope this explains a little and I am not saying it is bang up to date as it is some time since I was involved in audit, as many accountants get out of it soon after qualifying to pursue more lucrative employment, hoping to be perhaps a Chief Financial Officer or the like eventually, if you get my drift.
A case then of gamekeeper turned poacher, not that I think this could be the case in this instance of course.
It's also worth remembering that very many CEO's are also qualified accountants, so know and understand the way it all works.
Forget suing the auditors imo, worst case for them is usually a fine years down the line when all but a few will have forgotten this, because other similar cases will be happening all the time.
Companies who change banks regularly often used to raise an eyebrow, but don't know if this is still the case.
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