Quote of the day – accountants “not set up to look for fraud.”

Following the acrimonious collapse of a British cake business, Patisserie Valerie, a quote of the day from a top accountant:

We’re not looking for fraud, we’re not looking at the future, we’re not giving a statement that the accounts are correct . . . we are looking in the past and we are not set up to look for fraud.”

What they are set up for, it seems, is to receive fees. Many large firms receive large fees for auditing the companies that fail, then receive further large fees for carrying out insolvency processes. Their size and reach, particularly when it comes to the “Big Four” firms PwC, Deloitte, EY and KPMG, also gives them enormous market power, enabling one firm, PwC, to “name its price” in an insolvency case.

Here’s another quote, from an earlier episode, where a Big Four auditor is being grilled over a similar debacle:

I would not hire you to do an audit of the contents of my fridge, because when I read it, I would not know what was actually in my fridge or not. And that’s the point of auditing, isn’t it?

Quite.