He creates a porta-potty company called “Mr. John” to help steal $2.8 million, Manhattan D.A. charges.
(Update: Fixed Link)
(Update: Fixed Link)
Prem Sikka takes a good hard whack at the current state of auditing in the Guardian.
The massive hike in audit fees has not given us better audits. Carlyle Capital Corporation collapsed within days of receiving a clean bill of health form its auditors. Bear Stearns was bailed out within a few days of receiving another clean bill of health. In the current financial crisis, all major banks received a clean bill of health even though they engaged in massive off balance sheet accounting and around $1.2tn of toxic debts may have been hidden.
The article is completely one sided but then again, I have yet to see any one put up a decent defense from the auditor’s side.
CFO.com has an interview with Michael Fung of Wal-Mart and they discuss how spending some time in internal audit can give you a better operational perspective on a business.
I saw Torstar learn that the hard way while I was at Transit TV. Torstar had outsourced it’s internal audit to Deloitte. After a few years they realized that all of their most effective accounting personnel had come up through internal audit and they had lost the next generation of accounting execs. As people were recruited out of the company, Torstar had to start to look externally for good help. With the new requirements of the Canadian version of Sarbanes-Oxley, they started a small SOX task force internally that was starting to grow into the next internal audit group.
The phenomenon was true when I was at Darden as well. Folks in internal audit understood the company’s accounting but they spent a lot of time working in and with the operating groups so they got a great understanding of a company’s operation and how it affects the bottom line. Internal audit folks often get rotated through different operating divisions as well giving a truly complete perspective over time.
The lesson, simply because you can outsource, doesn’t mean you should. You have to decide what’s strategic and internal audit can be very strategic long term.