Was the audit evidence sufficient and appropriate?
It could be very interesting to see how this one develops!
A UK accountancy group signed off the 2007 accounts of one of their audit client companies, having accepted the valuation of £11 million for one of its assets, a ruby known as “The Gem of Tanzania”.
In the previous year’s accounts, a different firm of accountants had accepted the valuation of the same stone at £300,000.
On the basis of the £11 million valuation the owner of the company, came to the rescue of another company Wrekin Construction. Wrekin Construction was subsequently put into administration earlier this year and the administrators, Ernst & Young, looked to have the ‘ruby’ valued.
It turned out instead of being the world’s most valuable ruby, it was in fact a lump of anyolite worth in the region of £100!
Bet those previous auditors are not sleeping very well right now.
Still it would make a really nice paperweight!
