（2004）Watchdog or Bloodhound？The Push and Pull Toward a New Audit Model.pdfVIP

Copyright © 2004 Information Systems Audit and Control Association. All rights reserved. . Watchdog or Bloodhound? The Push and Pull Toward a New Audit Model By Deepak Sarup, CISA, FCA ore than 100 years have elapsed since the Court of Has Self-regulation Failed to Appeal in England delivered a landmark judgment Meet the Public Interest? Min the Kingston Cotton Mills case. The facts were As with many other professions, the audit profession prides reasonably simple and not contended by the parties. The itself on being largely self-regulating. This modus operandi is company’s managing director, who subsequently confessed the increasingly under attack as the profession attracts, fairly or frauds he committed, had falsified its accounts. In particular, unfairly, some of the blame for the recent corporate failures the quantities and value of the company’s stock had been and the consequent losses to the investing public, the falsified for many years but there was nothing on the face of thousands of innocent employees and suppliers, and a the accounts to excite suspicion. It was suggested to the court multitude of other stakeholders. that the auditor should not have relied solely on the At Enron, the starting point for these recent failures, the representation of the managing director and should have profession tried, unsuccessfully, to rationalize the patently further investigated the matter. In a unanimous judgment, the failed audit. The complexities of Enron’s business model and three Lord Justices reversed the decision of the lower court and