Sunday, May 16, 2010

Auditing: Trust or Frustration, but where is the Retribution? When will Justice come?

It is so frustrating to read this article from the Bahama Tribune wherein even the "trusted" auditor from the Bahamas (from a "reputable" firm, Grant & Thornton) didn't have any faith in his own work! The title says it all "Auditor had 'no confidence' in failed $440m fund's value".  Or does it? How can it be that there is no criminal investigation yet for any aspect of this Norshield debacle? Where is the retribution, the penance, the castigation? When will there be justice?

A follow-up ("Bahamian fund audit sign-off is seyed[sic] again") to the original article seems to indicate that Paul Gomez, the Bahamian auditor, was forced to accept potentially fallacious information because his firm was not permitted to audit other funds in the Olympus Univest Investment Fund's structure. The overall audit was conducted by a Canadian accounting firm (we believe that to be KPMG) selected by the Fund's manager. Regardless of the avoidance of responsibility, why did the auditor or the audit firm wait to be interviewed to raise this issue? The matter dates back to December of 2001! RSM Richter, the receiver, has indicated that the Bahamian Channel Funds played a key role in the collapse of Olympus and "were overstated by at least $200 million in 2002 and $300 million in 2003, an overstatement of approximately 88 per-cent in 2003."