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I am no lawyer, but being incompetent or negligent is not a a crime.
Knowingly signing a clean audit report on accounts that are known by the auditor to be incorrect very possibly is, perhaps depending on what consequences follow the signing. But that is so rare an event as not to be worth spending any time thinking about.
I don't believe that many auditors sign off accounts that they know to be materially incorrect - some do, but I've found them to be in a small minority. Far more often, auditors sign off accounts in good faith where those accounts include judgments about the future which turn out to be different from what actually happens. Hindsight is a wonderful thing: it's far too easy to work backwards from a corporate collapse and point out the judgments which didn't come to pass, but much harder to assess the original judgment on the basis only of what was known at that time.
It's also worth considering that very few companies collapse due to poor auditing rather than poor management or governance - from the tone of some of the coverage the lay person could be forgiven for believing that companies fail because of weak auditing. Rather than looking to criminalise auditors, should we be asking why more directors aren't prosecuted under Section 501?
My solution to this is really quite simple. ANY corporate bankruptcy within 6 months of a clean audit report is prima facie a dodgy audit, and the default assumption is prison and hefty fining in the case of large companies.
Alternatively, just accept all auditors are chocolate fireguards and scrap auditing altogether.
At the moment it's not a level playing field. Sceptics like me don't invest in companies where I can see there could well be some dodgy accounting policies and auditing going on.
Whilst naive investors get scalded time after time.
Bulls make money. Bears make money. Sheep get eaten.
Having been on the end of poor auditing in the public sector I can say that it can be about sending in inexperienced and untrained staff. As an educational establishment we had a "big" firm and there was no consistency of staff (so no one looking at year on year trends) and often they did not have the knowledge to spot things. We sacked them when someone they sent to check the journals asked our FD "what is an accrual?" not what is that accrual. He didn't understand them and our FD had to explain it to him.