We are approaching the tenth anniversary of the collapse of Enron. Have the lessons been learnt? Enron was the US energy giant that failed only 12 months after its share price rated it seventh largest corporation in America. A handful of tenacious journalists penetrated the miasma of filed data and revealed that the bulk of […]

Litigation warning – remember the cycle!  The pattern of litigation tends to be cyclical since it shadows the economic cycle. When there is general prosperity and businesses flourish there is still plenty of litigation (when is there not?) but its character reflects boom-time activity. Businesses buy other businesses and then claim that they overpaid. Although […]

How sustainable is the alleged economic recovery? A brighter outlook certainly appears to be in evidence in parts of the City. Construction work on glitzy office buildings has resumed. A stroll through the Royal Exchange takes you past packed wine bars, expensive restaurants and boutiques displaying the most opulent array of branded merchandise – jewellery, […]

  One of the defining features of the economic crisis is disclosure of high-level fraud on a breathtaking scale. Although the auditors’ traditional mantra (“it is not the purpose of audits to detect fraud”) is repeated at every opportunity, somehow those who rely on audits as a safeguard do not get the message. The battle […]

Time for a reformed regulatory framework – auditing included   The economic collapse is merciless in its revelations of failure, whether evidencing spineless regulation, ignorant policy-making, ineffective auditing, incompetent rating or wimpish governance. There’s nowhere to hide – as Warren Buffett puts it, when the tide goes out you can see who’s been bathing naked. […]

Now we know: the booming economy was a huge Ponzi scheme Bernard Madoff’s $50 billion Ponzi fraud is now legendary. Yet the fabric on which our entire credit explosion rested was just as illusory as Madoff’s investment fund. It existed in appearance only. The toxic financial instruments, so neatly packaged by investment houses before being […]

Every sizeable organisation puts procedures in place for ensuring that outlays of large sums are given prior authorization and that expense claims are supported by original receipts to show that the expenditure was validly incurred. If such procedures are ineffectively monitored they are open to abuse. Indeed, many of the forensic assignments I have been […]

The EU has been at it again. Its Statutory Audit Directive requires auditors ceasing to hold office to give their successors access to all “relevant information” if the successors request it. This misguided dictum is being introduced as an amendment to our Companies Act 2006 and a new Audit Regulation is being drafted. “Relevant information” […]

Banks deserve our opprobrium: they have forgotten all basic principles   The Chinese Sage Lao Tsu wrote, on the subject of government, that in the golden age people do not even know they are being governed; in the silver age they revere their leaders; in the iron age they respect them; and in the age […]

The criminal findings against former directors of the Independent Insurance Company were of particular interest to me: a large slice of my firm’s primary layer of professional indemnity insurance was carried by the Independent at the time of its collapse in mid-2001 and had to be replaced in a hurry. Secondly, a small team from […]