Limited liability for limited trust
We might blame the auditors for their errors leading to huge loss either through stock or investment. So some cases lead to class action against auditors for compensation. That is based on the opinion of the share holders or investors.
By reading "Accountants consider limiting their liability", it seems that the fact may be true that their fee would not be justified for the chance of unlimited liabilities.
Now, it is again the problem of the whole system. As I have pointed out earlier, the meaning of audited reports should be adjusted. 'Audited' is not fraud proof; it just means someone outside the corporation has read the reports and without guarantee that there was no error or fraud.
Perhaps we need to have something added to the audited report, declaring the auditor's fee as well as how much will be liable if there is any problem. Our judgment will be based on this information. Certainly this would lead to some new approach or knowledge. Great, every new prospect would create a lot of jobs or fortune from researching, training etc.
I do not mean that the suggestion to have limited liabilities is wrong. It is a fact because they have to face legal challenge and possible huge financial bearing.
The recent case "PwC defends audits faulted by PCAOB" makes us wonder if auditors did not work seriously or did not perform auditing, how can we know? Yes, we have to trust usually. Now this case talks about quality of audit. Like someone says we need auditing for auditors. That is a sad thing when we have to worry about someone whom we trust. By adding another layer of audit may not be perfect since fraud would happen again with higher level.
So what should we do? Well, if you want to invest, remember that it is like gambling. If you want to buy anything, there is no evidence but guess work.
Remember the source of fraud, not the auditors, not you or me, it is the leadership and the corporate governance. We have tons of theories, tons of empty talks. Nothing seems to be true. The only truth is our luck. May be we are lucky not to invest in the wrong share. May be we are out of luck when bad thins happened. That's it.
By reading "Accountants consider limiting their liability", it seems that the fact may be true that their fee would not be justified for the chance of unlimited liabilities.
Now, it is again the problem of the whole system. As I have pointed out earlier, the meaning of audited reports should be adjusted. 'Audited' is not fraud proof; it just means someone outside the corporation has read the reports and without guarantee that there was no error or fraud.
Perhaps we need to have something added to the audited report, declaring the auditor's fee as well as how much will be liable if there is any problem. Our judgment will be based on this information. Certainly this would lead to some new approach or knowledge. Great, every new prospect would create a lot of jobs or fortune from researching, training etc.
I do not mean that the suggestion to have limited liabilities is wrong. It is a fact because they have to face legal challenge and possible huge financial bearing.
The recent case "PwC defends audits faulted by PCAOB" makes us wonder if auditors did not work seriously or did not perform auditing, how can we know? Yes, we have to trust usually. Now this case talks about quality of audit. Like someone says we need auditing for auditors. That is a sad thing when we have to worry about someone whom we trust. By adding another layer of audit may not be perfect since fraud would happen again with higher level.
So what should we do? Well, if you want to invest, remember that it is like gambling. If you want to buy anything, there is no evidence but guess work.
Remember the source of fraud, not the auditors, not you or me, it is the leadership and the corporate governance. We have tons of theories, tons of empty talks. Nothing seems to be true. The only truth is our luck. May be we are lucky not to invest in the wrong share. May be we are out of luck when bad thins happened. That's it.
posted by F. H. Tong | 3:08 AM
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