“As outsiders, we’d like to think that auditors are looking for fraud, but fraud detection isn’t one of their mandates,” Matthias Breuer, an accounting professor at Columbia University’s Graduate School of Business, told Forbes. “Auditors don’t go into their work with an adversarial mindset. Their mandate isn’t to be a whistleblower, and because of that it’s usually insiders and short-sellers that uncover these issues.”Need a few examples? Ernst & Young, after nodding approval at Wirecard’s books, could only watch as the German firm imploded over a $2.08 billion vanishing act. Once an auditing giant, it crumbled under the weight of its involvement in Enron’s notorious collapse.

Source: Forbes January 14, 2024 08:37 UTC