Way back in 1896 in the famous Kingston Cotton Mill Case, was Lord Justice Lopes suggesting that auditors need a dog licence?
The facts of this case were basically that an action was brought against the auditors of the company for negligence, in failing to detect a fraud which involved the management of the company wilfully overstating the value of the company’s inventory.
In finding that the auditors were not guilty of negligence, the Judge famously said the following:
“An auditor is not bound to be a detective, or … to approach his work with suspicion, or with a foregone conclusion that there is something wrong. He is a watchdog, not a bloodhound.”
The Oxford English Dictionary provides us with the following definitions:
Watchdog: ‘A dog kept to guard private property.’
Bloodhound: ‘A large hound with a very keen sense of smell, used in tracking.’
It’s a long time since 1896 and nowadays, there is perhaps more a way of thinking that auditors should be a little bit less of a sleepy old watchdog, and rather more of an active bloodhound.
Make sure that you are up to date on an auditor’s responsibility for detection of fraud.
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2009-09-05 18:23:292009-09-05 18:23:29What kind of dog are you?
Reporter Norman C. Miller won a Pulitzer Prize in 1964 for his reporting on the De Angelis story.
Tino De Angelis was the ‘brains’ behind ‘The Great Salad Oil Swindle’ (the name of the book).
This case showed quite clearly that attendance at stocktaking by an auditor, will not provide, in itself, sufficient appropriate audit evidence on which to base the audit opinion.
I have always found one of the most interesting ways of studying internal control systems and auditing procedures is by looking at reports on frauds, indicating where things have gone wrong in real life.
Last time I looked on Amazon there were some copies of one of my favourite books available, alternatively perhaps try your local library.
Happy bedtime reading!
https://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.png00Stevehttps://www.theexpgroup.com/wp-content/uploads/2018/06/styleguide-EXP-4.pngSteve2009-08-05 18:26:332009-08-05 18:26:33Looking for a good bedtime read?
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