On auditors' recognition of their responsibilities:
As I talk to auditors, I’ve found there is a lot of confusion in the profession when it comes to designing audits to detect fraud. I spoke with a new hire from PwC last week who had taken my class on fraud the year before. In my class, I make it very clear that the auditing standards specify that auditors are responsible for providing reasonable assurance that there are no material misstatements due to fraud. However, he was already confused and said he had read the firm’s communication about the Colonial case and thought auditors don’t have responsibility for detecting fraud. Needless to say, I was a bit disappointed that he had forgotten what he learned the year before in my class!
On the potential for changes to auditors' procedures in order to better detect fraud:
I personally think the skills needed to make these changes in audit procedures are not that hard to learn but someone needs to push the profession into widespread changes. The PCAOB is likely the best hope for this but the courts may beat them to it, as in the Colonial case.
The full interview is worth the read. Check it out here.