The FT's noted that:
Big companies and their outside auditors often have close professional relationships. But now, for the first time, US regulators have taken enforcement action over relationships that became a little too close: it has fined professional services firm Ernst & Young $9.3m for failures including an auditor's romantic involvement with a client.
The cases include two instances of an auditor and a senior manager in the audit client getting intimate. When the most basic rule of auditing is independence you have to wonder how far professional ethics have fallen when firstly the auditors in question let these situations continue and secondly others did not intervene to effect changes.
Superficially this look like a minor issue; actually it's about an environment in which the most basic of rules are not complied with. And that's worrying.
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The themes of corruption and dishonesty are cropping up with alarming regularity. I have recently been made aware of John Bagot Glubb and his book “The Fate of Empires and the Search for Survival”. He studied a number of Empires throughout history and came to the conclusion that they all go through 6 or 7 phases the last two being decadence followed by decline and collapse. There are lots of parallels with today’s society including mass migration and celebrity worship. Apologies if he’s been mentioned before but I found it fascinating.
Could this be why companies fight tooth and nail to avoid auditor. switch even over decades?
I thought it was to keep the skeletons in the cupboard — but I presume one function oils the wheels of the other.