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SEC: How Ex-PwC Auditor Missed Fraud

Former audit partner settles charges that detail repeated failure to validate records at "Grand Theft Auto" game-maker Take-Two.

Stephen Taub, CFO.com | US
February 12, 2008

Gaming the auditor

When auditors refer to auditing services as being priced at "commodity rates", are we surprised that a gaming company can park inventory and go undetected? Cost/profit considerations will continue to lead to audit failures in cases involving fraud. The audit partner was under pressure to give a clean opinion and keep the client. Every audit is signed off by another (peer) partner, are they under the same pressures as the original auditor? My suggestion would be to prosecute and or publicize indentity in fraud cases. Many frauds are commited by "unindicted co-conspiritors" of previous frauds. The same people are responsible for serial frauds.

Posted by Tom Carment | February 13, 2008 04:47 pm

PwC Auditor didn't do so bad.

The auditor's first job is to make sure that he keeps the account so that he makes money for PwC. That is the most important thing to PwC. Audit failures are only a problem if they are discovered. Hopefully, PwC's audit inventory will compensate for the audit failures. The procedures necessary to prevent audit failures are just too much trouble and they cut into profits anyway. Besides, I believe that Mr. Fish has done the best that he could and in fact would make an excellent SEC Commissioner.

Posted by Ralph Adamo | February 13, 2008 01:29 pm

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