Where were the auditors?

Where were the auditors? This is the question investors and public have been asking after a number of business collapses and accounting scandals in the 21st century. In quite a few of these cases, auditors were implicated in the fraudulent activities.

Requirements

Select any one of these institutions where auditors were implicated. Briefly describe what happened in this institution and how the auditors failed in their duties. Also discuss what penalties were imposed and what additional regulatory and legal oversight was introduced.

Finally, what do you think are the auditor's responsibilities relating to fraud?