Word: auditors
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Dates: during 1990-1999
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...homework." Here rest the domains, familiar to everyone, of being on the spot, of feeling guilty, of fearing reprimand, failure or disgrace, and on the other side of the ledger, of wishing to seem more impressive to others than the bald facts will allow. Complicity between liar and auditor rarely occurs in this category; the liar wants to get away with something. If a lie turneth away wrath, or win a job or a date on Saturday night, why not tell it? Because to do so is immoral and wrong, runs the standard, timeworn answer. But this stricture has never...
...struggling World Basketball League, which folded Aug. 1. The firm says the two men participated in a scheme to cook the company's books, forcing it to write off $350 million -- including the allegedly stolen funds and $340 million in overstated profits. The privately held concern has dismissed auditor Coopers & Lybrand, which it blamed for failing to spot the fraud. The accounting firm says Phar-Mor's move was "apparently designed to posture, bluster and transfer blame...
Karen E. Esielonis '80 received a scholarship from Massachusetts in 1989 to help pay for a graduate program in Fine Arts. On Tuesday an auditor from the IRS told her that she had failed to report her scholarship...
...problem is that many investors think it is. If something goes wrong, they tend to blame the auditor as well as the company's top officers. The common assumption is that auditors should be among the first to know whether a company is failing or even defrauding investors. To be sure, accountants can be found negligent and held liable if their own work is sloppy. A 1989 report by the General Accounting Office on failed thrifts, for instance, found many cases where auditors simply failed to provide independent verification of management claims that problem loans were collectible...
Responsibility for spotting outright fraud, though, is another matter. Says John Hill, assistant professor of accounting at Indiana University: "No audit is going to uncover cleverly disguised fraudulent schemes concocted by management." In the strictest sense, auditors are not required to look for fraud -- but controversy rages about what they should do when they stumble upon it. Rather than inform on clients, auditors usually prefer to drop the account quietly. When that happens, the client must file form 8-K with the Securities and Exchange Commission, explaining why the auditor resigned. But details of the disagreement are typically fudged...