No problem Bandage, my views below are in no way related to the case outlined in this thread.
Firstly I think the major problem auditors have is the public perception between what an audit is and what an audit actually is. An audit is only designed to catch material errors, if a bank’s balance sheet is off by a few million no one is really going to care. Also, people have to remember audit reports are addressed to the shareholders and board of directors and not the general public.
In a private company it would be quite easy to pull off a substantial fraud, depends on how much attention the shareholders or other directors are giving the numbers that are being reported to them. One method would be to draw the cash out of the company and to replace the cash asset with a receivable from a related party like a directors loan or something, i.e. credit the cash, debit the new receivable. Total assets doesn’t change, profit doesn’t change. You could do this a few times and substitute in a fake asset for the cash in a few areas on the balance sheet before it would get noticed. If it’s not a major balance then the auditors wouldn’t pay too much attention to it. In the case of a director’s loan all you’d ever get is a letter from a director saying that there is a receivable for this amount so it’s easy enough to fake.
This is a good reason why company’s normally require two signatories before any cash can leave the company’s accounts, that means you’d need collusion for the fraud to happen. If there was an instance where there was only one accountant in a company and that person controlled the cash and no one else really paid much attention to the books then it would be very easy to get cash out the door.
As for techniques the auditors could use to uncover fraud – professional skepticism is the most powerful of all. However, they should be spending time reviewing the books for suspicious looking accounts like suspense accounts, other assets etc. It’s not up to them alone to find these things either though, you’d equally have to point the finger at the directors, under company law they have a responsibility to the shareholders to ensure there are adequate controls in place to mitigate the risk of these type of things happening.
If there is any truth in the allegations being alluded to by the news reports in this thread then DJ is an absolute mong for not noticing this and for allowing one person to have complete control over the financial side of things, he should shoulder equal blame with his auditors who are also complete mongs for not noticing something this big (if the allegations are true).
'91, Tinnion. But an excellent, concise post otherwise and it should be easy for those with limited experience of the game to understand. Auditors are watchdogs, not bloodhounds.
Kev - you have a disctinct lack of appreciation for what an audit is.
All this blaming the auditors is a bit like blaming schoolteachers for what kids get up to at midnight. Yes, they have a chance to influence them but you have to look at the parents first.
i agree.
BT is on fire here.
i would consider myself to be highly technically competent and my employment and education record speaks for itself but i really appreciate when Bandage summons Brian to explain in Reader’s Digest terms to financial dullards like me matters such as the ecomony , chartered accountant qualification requirements, corporate law and now this comprehensive insight of auditing practice.
it comes to me as now suprise however that it is a GAA player that is caught out here.
it has been proven on here that the education and employment record of high profile GAA players is very poor in comparison to say a Rugby player.
Can anyone imagine Franno fucking up like Carey has?
Compare and contrast BOD’s post match interview following our grand slam succes in 2009 to the rural gibberish spouted by that incoherent simpleton Michael Fennelly following Kilkenny’s win in Croke Park, what about Adrain Morrissey on italksport last friday night stuttering about man united and Franno sneering at him, Noel o leary from cork clears vegatation from the side of a mountain for a fucking living… meanwhile Jonny sexton is now doubt completing a degree in a university… the clip in the savage eye comes to mind from a few weeks ago of the simple child in the class been handed a hurley…
i blame the fitzgibbon cup for this, colleges like WIT are so desperate to win it that they try to give guys like setanta o halpin, paul flynn and dan shanahan a degree just so they will hurl with them for the 4 years, many young GAA players now see that being acadenically challenged is now not an issue but rather a right of passage as the “hurlin” will get you a job.
and now Kev is on here primed to launch an attack on most decorated man like BT over his auditing knowledge…
lessons learned here
BT knows the score
GGA players have poor education and poor job prospects
Like was said earlier, this story was in one of the Sunday papers a few weeks back. A family doesn’t get on, big deal. Hoorbag of a sister stealing from her brother isn’t good though, no matter who it happens to.
I certainly hold auditors and accountants in general in higher esteem after Brian’s (may I call you Brian?) illuminating post there. If my understanding of Brian’s post is accurate, then the auditor behaves in a manner not unlike the telltales that are attached to the stay of a sail of the basic sailboat in that while they indicate the airflow on the sail, the boat will carry on regardless.
Not much help when the parents are accountants as well as solicitors too.
I base my comments on accountants for having worked very closely with them for 3 years, both for a firm and with Accountants throughout the entire country.
There are many fine and noble accountants, but an unusually large amount of wreckless, greedy, unprofessional shower of bill avoiding cunts i have ever had the privilege of dealing with. I sat in meetings/presentations listening to some of the worst advice i have ever heard been given to ordinary folks who trusted these vultures and many of them now have nothing to show for investments/nest eggs/pensions etc etc.
Mickee - What would you suggest i study this time?
I’ve been fighting for years to educate lay man on what an audit actually is. If we were to actually audit to the precision that the man on the street think we should, we’d need to increase our fees and time tenfold. Yes there are problems with the profession (the allegations above if true would be very disappointing and I’d fully expect the firm in question to lose their auditing certificate for negligent behavior) but it’s not the cause of all the problems in the country.
Kev, I’m sure that, just like Fianna Fáil, these accountants gave the best possible advice based on the available evidence at that point in time. I’m a member of Chartered Accountants Ireland and I’ve interacted with accountants on a regular basis throughout the past 9 years. The main personality trait that strikes me when dealing with accountants (and whenever I undertake a self assessment) is integrity.
I’m an auditor myself, i’m not talking about auditing, i’m sure ye are all fantastic auditors. Doesn’t get away from the fact that ye are a shower of cunts though.
I have no idea what you’re saying here - are you saying some accountants are acting as solicitors too?
I think you are a bit misguided on the term accountant here. One major problem with the profession is that any man off the street can set up shop and call himself an accountant, I’m sure there are guys out there that you speak of that give out terrible advice to ordinary people on what to invest their money in. An accountant is not qualified to do this and no one should be doing this without an appropriate qualification, I believe the most appropriate one for advising small investors is the QFA.
The profession tried to have a European law enacted that restricted the use of the term accountant but this was not successful (I believe it was for architects), there’s a lot of guys out there that have no right to call themselves accountants and give the profession a bad name, don’t let that taint your view of the entire profession.
