One of the biggest misconceptions the general public holds is that an audit is performed to ensure no fraud exists within a company. However, in an audit report the auditor clearly spells out that taken as a whole "the financial statements present fairly, in all material respects, an entity's financial position, results of operations, and cash flows in conformity with generally accepted accounting principles." Nowhere does the auditor attest that there is no fraud present. An auditor simply isn't required to look for fraud. If they come across it, they must say something. But they are not obligated to find it. Who knew the MBTA's "See Something, Say Something" approach applied to auditors as well? Ouch. More nightmares!

So where does an auditor's responsibility related to fraud come in? Check out this New York Times article. (If you have exceeded your free article access for the month, I have attached a PDF of the article.)

Questions

• What is FIFA suspected of doing? Did these issues appear in FIFA's financial statements?
• What were two of the red flags within FIFA?
• Do you think the auditors shirked any responsibility?Why or why not?