5 ms·

what's the legal liability in omitting a problem you've found during an audit? not for the auditing company, for the auditor.

by znpy 6y ago

arethuza 6y ago
It was an internal audit role and she wasn't a professionally qualified accountant.
- Jtsummers 6y ago
  So no legal risk, but there is still professional risk. When external auditors come in or an issue is found that impacts customers, they could scapegoat their internal (deliberately made useless) team, fire them, and have a go at using that as part of their defense/response. The higher-ups would be ok if they can pull it off, but your wife would've been out a job and with an inability to get a reference from them (beyond the basic: She was employed here from X-Y). Best plan for everyone is to get out of shady companies like that ASAP.
  - cutemonster 6y ago
    > shady companies like that Ok so that's not how things usually work? In most? companies internal auditors do real work, would you say? (I'm clueless)
    - Jtsummers 6y ago
      In my experience, yes. They certainly don’t tell people to slow down or ignore findings.
jacquesm 6y ago
https://en.wikipedia.org/wiki/Arthur_Andersen https://en.wikipedia.org/wiki/Arthur_Andersen For the individual auditor: if you're a chartered/certified accountant you can get into a lot of hot water, including possible jail time.
bardworx 6y ago
Thankfully there are very strong incentives for audit companies not to f-up. They themselves are not audited and are not public. Their reputation means a lot to them. With this situation, there is a reasonable expectation for EY to lose clients. Partners will also face some consequence. Most likely they will be let go and removed from accreditation by CPA (in the US). There are several high profile cases where partners get sacked[0]. [0]: https://www.ft.com/content/5179fb94-fd6c-11e8-ac00-57a2a826423e https://www.ft.com/content/5179fb94-fd6c-11e8-ac00-57a2a8264...
- purple-again 6y ago
  Partly false. We were audited every year by one of our competitors. There is a strong likely hood that the reason she was told to stop finding problems is because the de minimus limit (the dollar figure at which we don't care) is truly, and I mean TRULY massive for the kind of companies that are audited by EY, PWC, KPMG, and Deloitte. I refuse to believe for one second that a serious issue was swept under the rug by a senior or manager. As for the guy sleeping in cupboards...the staff at those firms reguarly work 80 hour weeks (not the "I work 80 hour weeks counting all kinds of stupid things" but the "I was at the client site or in the home office for 80 hours this week". It was a very common occurence for hard working staff members to take naps at the client (most likely because last night was a 2am night). Promotions at these firms are often very competitive as the organization is an "Up or out" organization designed to chew up fresh college grads. The peer review is conducted by an independent evaluator, known as a peer reviewer. The AICPA oversees the program, and the review is administered by an entity approved by the AICPA to perform that role. 2. The peer review helps to monitor a CPA firm's accounting and auditing practice (practice monitoring).
  - whatshisface 6y ago
    >There is a strong likely hood that the reason she was told to stop finding problems is because the de minimus limit (the dollar figure at which we don't care) is truly, and I mean TRULY massive for the kind of companies that are audited by EY, PWC, KPMG, and Deloitte. I refuse to believe for one second that a serious issue was swept under the rug by a senior or manager. That's a big claim for you to make given that you don't know the company, the size of their clients, or even whether or not anyone went to jail over the proceeding decades.

what's the legal liability in omitting a problem you've found during an audit? not for the auditing company, for the auditor.

by znpy 6y ago

what's the legal liability in omitting a problem you've found during an audit? not for the auditing company, for the auditor.

arethuza 6y ago

It was an internal audit role and she wasn't a professionally qualified accountant.

Jtsummers 6y ago
So no legal risk, but there is still professional risk. When external auditors come in or an issue is found that impacts customers, they could scapegoat their internal (deliberately made useless) team, fire them, and have a go at using that as part of their defense/response. The higher-ups would be ok if they can pull it off, but your wife would've been out a job and with an inability to get a reference from them (beyond the basic: She was employed here from X-Y). Best plan for everyone is to get out of shady companies like that ASAP.
- cutemonster 6y ago
  > shady companies like that Ok so that's not how things usually work? In most? companies internal auditors do real work, would you say? (I'm clueless)
  - Jtsummers 6y ago
    In my experience, yes. They certainly don’t tell people to slow down or ignore findings.

jacquesm 6y ago

https://en.wikipedia.org/wiki/Arthur_Andersen https://en.wikipedia.org/wiki/Arthur_Andersen For the individual auditor: if you're a chartered/certified accountant you can get into a lot of hot water, including possible jail time.

bardworx 6y ago

Thankfully there are very strong incentives for audit companies not to f-up. They themselves are not audited and are not public. Their reputation means a lot to them. With this situation, there is a reasonable expectation for EY to lose clients. Partners will also face some consequence. Most likely they will be let go and removed from accreditation by CPA (in the US). There are several high profile cases where partners get sacked[0]. [0]: https://www.ft.com/content/5179fb94-fd6c-11e8-ac00-57a2a826423e https://www.ft.com/content/5179fb94-fd6c-11e8-ac00-57a2a8264...

purple-again 6y ago
Partly false. We were audited every year by one of our competitors. There is a strong likely hood that the reason she was told to stop finding problems is because the de minimus limit (the dollar figure at which we don't care) is truly, and I mean TRULY massive for the kind of companies that are audited by EY, PWC, KPMG, and Deloitte. I refuse to believe for one second that a serious issue was swept under the rug by a senior or manager. As for the guy sleeping in cupboards...the staff at those firms reguarly work 80 hour weeks (not the "I work 80 hour weeks counting all kinds of stupid things" but the "I was at the client site or in the home office for 80 hours this week". It was a very common occurence for hard working staff members to take naps at the client (most likely because last night was a 2am night). Promotions at these firms are often very competitive as the organization is an "Up or out" organization designed to chew up fresh college grads. The peer review is conducted by an independent evaluator, known as a peer reviewer. The AICPA oversees the program, and the review is administered by an entity approved by the AICPA to perform that role. 2. The peer review helps to monitor a CPA firm's accounting and auditing practice (practice monitoring).
- whatshisface 6y ago
  >There is a strong likely hood that the reason she was told to stop finding problems is because the de minimus limit (the dollar figure at which we don't care) is truly, and I mean TRULY massive for the kind of companies that are audited by EY, PWC, KPMG, and Deloitte. I refuse to believe for one second that a serious issue was swept under the rug by a senior or manager. That's a big claim for you to make given that you don't know the company, the size of their clients, or even whether or not anyone went to jail over the proceeding decades.