External auditors are only the last line of defence
Reliable financial statements start from within a company and that’s why whistle-blowers are valuable
Steinhoff, EOH and Tongaat Hulett have all recently been accused of financial mismanagement and misstatement of information, illustrating the challenges the corporate world has faced in the past few years in delivering a “clean” record that investors can rely on regarding compliant financial statements and good governance.
Listed corporates are required to have several checks and balances in place in terms of law and governance best practice. This makes it tough to understand exactly how financial mismanagement on such a scale can go undetected, sometimes for long periods.