Monday, 13 October 2008

Quick Note

Just heard Geoffrey Robinson (former paymaster general until forces to quit in one of the Mandelson scandals) on Newsnight (about 35 minutes in) blaming the auditors for the banking crisis.

As a business man he should know better. This is a prime example of the "expectations gap" the difference between what the public think auditors do and what we actually do.

Auditors are there to ensure that the financial statements are "free from material misstatement" and give a "true and fair view" of the financial position of the company.

It is the duty of management to look for fraud NOT the auditors (unless of course the fraud is material).

Auditors CANNOT recommend a change to the way a business operates this would mean auditors taking a management role within a company, this would be a conflict of interest.

We are here to ensure the statements are accurate enough that the differences between the Financial Statements and the true position will not influence the decisions of the investors.

Sorry to get protective, but this is my profession and education about the role of auditors is vital to understand the strengths and limitations of our reports.

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