Page 32 - Auditors Article

CONCLUSIONS

Who guards the guards? In the case of Patisserie Valerie,

internally, the guards were the CFO and the audit committee.
But, if the ability of the audit committee to detect fraud is

circumvented by the CFO, who provides the financial input,

then responsibility falls on the ultimate arbitrator of financial
viability the external auditors. Then again, if the auditors do

not see fraud detection as part of their remit the system is

fundamentally flawed, doubly so when fraud is perpetrated by
one of the guards.

In an industry such as the audit industry, where there is a lack

of competition, there is likely to be lessened quality and value
for money provided to customers such as Patisserie Valerie.

The 'Big Four' auditing firms dominate the audit industry and

as such they set its rules but not with impunity. Criticism at

government level has gained traction over the last few years
as the inadequacy of audits in relation to collapsed major

firms, not to mention the roles the auditors played in the

financial collapse of 2008, has occurred. Additionally, a

background of serious internal industry conflict has also
emerged. For the ‘Big Four’ audit fees are a relatively small

part of their revenue stream but one which seems to garner

the bulk of their negative publicity. Auditors like all other
businesses should surely be responsible for their actions or

services as being fit for purpose particularly the detection of

fraud. It is impossible for auditors to pick-up all instances of

fraud but those that are material surely are not outwith their
responsibilities e.g. Patisserie Valerie’s fraudulent overdrafts?