Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Raymond Duray who wrote (5510)	2/7/2002 12:11:55 PM
From: compradun	Respond to of 33421

RD and Yorkkie: I am afraid that my post was meant to address the "what is" and not the "what should be". I agree that the consulting arms of the various national firms have inherently brought conflicts of interest. So much so that audit services are being offered as "loss leaders" to attract the higher margin business. Keep in mind that in our current "business reporting model" ultimate responsibility lies with the producer of the financial statements, management. These are management's representations to the investing community. Auditors, using GAAS, merely opine as to whether they conform to GAAP. They reconcile cash, verify inventory and receivable and a few other basic procedures. In the audit opinion the may issue a "going concern" comment if they deem it necessary. If another firm audits the counterparty to a non-arms-length transaction then things can become muddy indeed. BTW wasn't Enron's counterparty audited by pricewaterhouse? In the realm of "what should be" I oppose making outside auditors primarily responsible for a companies financial statements. It smacks of "big brother" and gross inefficiency. I would not mind severe restrictions on consulting and pricing audits in a way that preserves clarity and objectivity on those engagements. This would not create a burden of finding fraud, but would leave that to time and/or whistle-blowers.