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Strategies & Market Trends : John Pitera's Market Laboratory
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To: compradun who wrote (5507)2/6/2002 5:50:18 PM
From: Yorikke   of 33421
 
compradun, fraud is not necessarily the major issue here. There can be no denying that fraud is difficult to detect. But setting GAAS in such a way that it permits misrepresentation may well be a serious issue that auditors will have to face.

Of course Misrepresentation is a wonderful term. Most any standard can be decorated with all kinds of if's and however's to the point of making it appear quite just and sensible, while allowing widespread misuse. If a company and its associated auditors follow flawed rules that permit statements that a reasonable man would consider misrepresentation, is it any less a misrepresentation because the Auditor has followed 'the rules'?

And as Auditors, is it not their responsibility to strive for more representative statements? If so, why has the profession allowed itself to be led astray? Why have auditors simply chosen to become befuddled with rules and regulations, while letting the statements lose their realistic basis?

Aren't the voices of the profession's own past coming back to haunt the profession? Aren't those people who said you can not be both a watch dog and an associate consultant being proved correct? Its not like the profession has not faced this issue since the first 'consultant' walked into a firm. It has, but in the end the $$$$$ were just to many and the companies charged with maintaining a 'business morality' found it easy to pervert it as the money flowed in.

It doesn't matter if this view is not exactly correct, that technically things were not quite that way. The fact is that the public now perceives the profession as in collusion with those who have made profits through fraud and misstatement. The self-regulation issue, long defended by Accountants and Auditors, is being scoffed at. The Government will step in, and audit independence will be subject to a host of rules and regulations. And this will be a major defeat for the profession and business at large.
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