AUDITING
MAGDA WIERZYCKA: Time for checks and balances to be done by the book
‘It is too easy to be lured into looking the other way or skirting responsibility by narrowing the scope of one’s audit assignment’
We have recently witnessed a number of examples of audit firms cosying up to clients and losing their independence and objectivity. To mention but a few, KPMG was fined $6.2m by the US Securities and Exchange Commission after signing off the audit of an oil and gas company that overvalued its assets more than 100 times; PwC was fined £5.1m by the Financial Reporting Council for misconduct following an investigation into the 2011 accounts of bankrupt RSM Tenon; and four KPMG partners attended the Gupta wedding paid for by money laundered from a Free State dairy farm project through a company they audited. Many of the clients involved were "whales", paying multimillion-rand fees. It is tempting to blur the lines. Audit firms are partnerships, with each partner being rewarded through profit-share arrangements proportional to their contribution. It is too easy to be lured into looking the other way or skirting responsibility by narrowing the scope of one’s audit assignment. Yet the role...
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