An auditor verifies the accuracy of a company’s financial records. He or she is supposed to spot any material misstatements, including those due to fraud or errors.
And yet in two of the largest financial frauds in history—the 2021 collapse of German payment firm Wirecard and the recent bankruptcy of cryptocurrency exchange FTX—auditors had placed a stamp of approval on the companies’ accounts.
How did they get things so badly wrong?
To find out how audits can mislead I’m joined on the latest New Money Review podcast by Francine McKenna.
Francine has worked for many years as an accountant, banker, journalist and columnist writing about accountancy. She is currently a lecturer on financial accounting at the University of Pennsylvania’s Wharton Business School.
Listen to the podcast to hear us discuss:
- What happened at FTX
- Why FTX’s offshore location and audit practices raised red flags
- The dangers of related party transactions
- The Tether and Circle stablecoins
- Why the 2002 Sarbanes-Oxley Act failed to stamp out corporate fraud
- Regulatory capture and political corruption
- Why audit is a process, not a test
- How investors can protect themselves
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