Friday, February 6, 2009
The Gas in GAAS
"[PWC] claims its audits of Satyam Computer Services Ltd. were made 'in accordance with applicable auditing standards and were supported by appropriate audit evidence'. (Pricewaterhouse Defends Its Audit Procedures.' Marketplace, Jan. 9). Rather than explaining an isolated indictment, the accountants' defense of their actions calls into question their entire reason for being. The point of an audit is to guard against fraud. If their 'standard' procedures are so inadequate, why bother with the auditing industry at all? The parallels to the ratings agencies are obvious", Robert Meyer letter to the WSJ, 17 January 2009.
I have likened CPAs to ratings agencies many times. Meyer doesn't know why CPAs have auditing standards: it's to have something to hide behind in lawsuits when CPAs fail to find fraud! Why do firms have whistle-blower hotlines? To surface whistle-blowers, then punish them, see my 10 January 2009 post, link: http://skepticaltexascpa.blogspot.com/2009/01/un-whistle-blowers.html.