The most well known case about how auditing can go wrong is the case of “Lernout & Hauspie". For my blog this week I found a video about this case. For those who do not know what happened to Lernout & Hauspie, I’ll explain what happened.
Lernout & Hauspie was a company founded by Jo Lernout and Paul Hauspie in 1987. It was a company specialised in speech recognition technology. After some rumours about financial impropriety, some journalist from the Wall Street Journal started an investigation. They revealed a big financial scandal involving improper accounting methods and fictive transactions to make dividends raise. But the most shocking fact in the scandal was that KPMG was involved. The companies accountant wasn’t only neglectful but he had an active role in the improper accounting. After the revelation of the inaccuracies the dividends collapsed what resulted in 2007 in bankruptcy.
According to me it’s unacceptable a company starts fiddling with the accounts because that’s a sign there is something fundamental wrong with the company. A healthy company produces and sales enough to make a lot of profit, what makes it unnecessary to fiddle. Second of all I wonder how it’s possible that an accountant can allow a company to fiddle with the numbers. Because it’s his duty to control the budgets, how can he be proud of what he has achieved when he doesn’t act properly?
link to the youtube video: http://www.youtube.com/watch?v=IkJ9KwdIHK4
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Too bad L&H did this. Their innovation was magnificent. But due to these scandals, it'll be something to dream about..
BeantwoordenVerwijderenAnd I think this accountant has a big footprint in this whole situation. She shouldn't have let this happen. So many people that lost their job, due to these facts..