A history of audit failures

[Dover]

The admission by Olympus Corp that it falsified financial reports for more than a decade should not shock anyone. The shock is that, for years, auditors failed to detect such massive fraud.

The failures of auditors to uncover cooked books, which run the gamut from Adelphia to Waste Management Inc, are a cancer on the accounting industry.

The failures go back years. How about Al Dunlap’s manufactured numbers at Sunbeam in 1998? Or teenage con man Barry Minkow’s ZZZZ Best, which turned out to be a Ponzi scheme and collapsed in 1987? Or Equity Funding, with its computer program to fabricate life insurance policies, in 1973? Or the National Student Marketing “pooling of interests” fraud in 1970, which gave birth to the Financial Accounting Standards Board? Or the 1938 McKesson & Robbins scandal, which gave us the first American audit standards? Or Ivar Kreuger’s 20 percent dividends Ponzi scheme in 1932?

That is but a sampling of big frauds that auditors somehow failed to detect, sometimes over many years during which they were supposedly scrutinizing books and looking for verification of revenue and assets.

cont'd

http://blogs.reuters.com/david-cay-johnston/2011/11/11/a-history-of-audit-failures/

[truedelphi]

1. Also, you have to remember that at the height of the housing bubble,

Not a single computer model used by Wall Street to determine futrure values of both the value of the housing stock or the value of the derivatives formulated by bets made around the housing bubble - no computer scenario allowed for the fact that any of the high prices could come down!

GIGO. Period.

[DainBramaged]

2. Olympus, now makers of historic fraud....

[Grey]

3. Arther Anderson........ n/t