Fuel to the audit fire

The Econmist has a report that PricewaterhouseCoopers has withdrawn 10yrs of audit reports from the Russian oil company Yukos that was declared bankrupt last year after falling foul of tax authorities who imposed crippling tax penalties.

Leaving aside the absurdity of being able to change your audit opinion retrospectively, one wonders if investors might now have a legitimate claim against the firm for damages. After all, they have effectively admitted their opinions were wrong over a prolonged period. Moreover, they insist that this change of heart was Government inspired/encouraged/influenced, so it is their own decision.

posted by John Wilson @ 10:51 AM Permanent Link newsvine reddit


At 11:44 AM, Blogger Hawkeye said...

I have long considered the statutory requirement for a public company to have audited accounts to be something of a farce. Typically the audit is mostly conducted by junior staff who have no knowledge of the business or undiustry they are auditing. They will therefore in all probability only uncover those instances of fraud and mismanagement that are so obvious that any fool could spot them. Where the management of the company however is either colluding with such fraud or not interested in exposing it, no audit is likely to expose this. That being the case why is it that shareholder money is wasted on audit fees. You would just as usefully add the audit fees to the expenses incurred by having the AGM and spending the cash on decent champagne to serve to shareholders who do make it to the meeting, or even sending individual bottles of bubbly to the shareholders themselves.


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