Business

Dec 4, 2008

Auditors pocket millions while asleep on the job

Collapsing markets have shown once more that the multi-national firms paid millions of dollars to audit public companies financial statements have been asleep on the job, writes Adam Schwab.

Collapsing markets have shown once more that the multi-national firms paid millions of dollars to audit public companies' financial statements have been asleep on the job.

Already, shareholders have watched in horror as once large, respected companies, with large, respected auditors, have happily signed off on balance sheets which bore little resemblance to the underlying facts. ABC Learning Centers, Centro, Allco, MFS, City Pacific and Babcock and Brown produced misleading financial statements over a period of years. On the basis of these statements, investors and banks provided large sums of money for these bold riders to carefully build their houses of cards, only to see them blow away at the first puff of a credit crisis.

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3 comments

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3 thoughts on “Auditors pocket millions while asleep on the job

  1. mirek

    Perhaps Mr. Schwab is being overly polite or diplomatic: with the conflict of interest as demonstrated in the few examples quoted, it seems that this is just the tip of an iceberg, and we can be pretty certain that a conflict of interest exists and has been there for a long time, with investore, analysts and ordinary ponters being the patsies. But not only have the auditors/ accountants and the frirns they ares supposed to audit at `arms` length` been `asleep`, read collaborating, but the regulators are also playing the Three Monkeys. One wonders: are they in the game too? Such quite reasonable speculations undermine any confidence in a market as being fair and transparent, The Government and it`s watchdogs play a crucial role here. Recently, a company with impeccable credentials, as reported by analysts, Transferld Services (TSE) cratered unexpectedly by 80% to $1.24. The skeleton in the cupboard was excess debt; seems as though analysts were fooled by the published figures. Lessons of Enron and other egregious examples of corporate fraud will never be learned unless the cosy money-making relationships are broken and removed `root and branch` to use Kevin07`s favourite phrase.

  2. dez

    The real winner for KPMG’s missteps was McGrath Nicol, who of course used to be part of KPMG…

  3. arty

    So what’s the problem?

    They did pay the fees didn’t they?

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