Investors need to stop imagining auditors or anyone else offers fraud protection

By Silas Brown
21 Jul 2020

Several companies boasting Big Four accounting firms as auditors have emerged as fraudulent, leading many to wonder what value auditors bring to an investors' understanding of a company. The big issue is that auditors have little obligation to detect fraud at companies they audit, and neither it seems does anyone else. Until they do, investors need to stop believing a Big Four sign-off is a seal of approval. In fact, for a system supposedly built with its own reputation in mind, developed markets have offered investors very little protection.

The Big Four accounting firms should be having a torrid time. Regulators are looking at ways in which they can be broken up. Journalists are pointing to their associations with dubious companies.

But two sets of significant people still seem to hold them in high regard, often higher ...

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