Mike...
I have some experience with at least one form of auditing from my years in the publishing business...circulation audits. Cahners maintained it's circulation information in a Denver facility for a very large number of prominent business magazines, and one of the issues the sales staff faced was presenting a truthful audit statement of circulation to prospective advertising customers who demanded proof that they were indeed buying what they pay for.
Auditing was done based on sampling a very small percentage of the total, but the sample to be audited was never known in advance. I mean never. The ABC or BPA auditors could ask for any file they wished, and if it wasn't as stated by the publisher, they'd ask for more. And as long as they were finding errors, they would keep on asking.
Trust me, Mike, we shook in our boots during those visits.
People lost jobs or gained promotions based on how well their audits went, and we knew it. At Cahners, and the vast majoriety of other publishers, things were kept squeaky clean. When things were not so at other publishers, the punishment was revenue (advertising) loss on a massive scale, and those firms simply went out of business.
That's not how it seems to work with financial auditing. What's an audit worth if management can simply lie and not be found out? Why did it take 15 months to fire Sullivan?
To whom is the internal audit committee responsible? Were they lied to as well or part of it?
When do you get really angry Mike? Enron, Adelphia, Global Crossing, World Com, maybe Merck. I've no doubt that some, maybe most, audits are honest, just like most people probably are. But the system is rotten, and too damn temptly easy to manipulate, no penalties equivalent to the missdoings, and no recourse for investors when their suits are dismissed.
Chaz |
