It seems that a senior partner from an audit f[i]rm joined a client, devised an off-balance sheet accounting ruse, cleared it with his former colleagues, who then signed it off for audit purposes, and it was used thereafter without further question arising to deliberately misrepresent the true nature of the balance sheet of the entity.

That sounds shocking expect for one thing – this is what happens day in, day out, the whole world over.

This is what securitisation was about.

This is what a lot of offshore is about.

Derivative trading is often intended to achieve such goals – and most finance directors have no clue what they’re doing when engaging in them, and nor do their auditors.

So, is it a massive conspiracy cooked up by the Big 4, or are audit partners and finance directors both ignoramuses who don't know what they're doing? It can't be both.

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Filed under: Accounting, Auditing, Other blogs with tags derivatives, idiots, offshore, richard murphy