Accountants not expected to spot fraud, says accountant
Employing one of the country’s largest accountants to audit your books will do little to spot if there is any fraud going on in a business, a leading accountant has claimed.
David Dunckley, chief executive of Grant Thornton, which was the auditor of collapsed cake chain Patisserie Valerie until mid-January, told MPs that expectations of accounts are unrealistic and it is not their role to
Dunckley told MPs on the business, energy and industrial strategy select committee that there was an ‘expectation gap’ that ‘needs to be fixed. We’re not looking for fraud, we’re not looking at the future, we’re not giving a statement that the accounts are correct,’ he said. ‘We are saying [the accounts are] reasonable, we are looking in the past and we are not set up to look for fraud.’
Grant Thornton is under investigation by the Financial Reporting Council for its audits of the chain for the years ended 30 September 2015, 2016 and 2017.
He told Rachel Reeves, the Labour chair of the committee: ‘If people are colluding and there is a sophisticated fraud that may not be caught by normal audit procedures.’ He said in an ideal world it would be spotted. ‘But in a shop that sells tea and cakes, you’d sort of think that might be spotted. It’s not a multinational complex organisation,’ said Reeves.
She added that according to the Financial Reporting Council’s international accounting standards, auditors have to pick up misstatements where they are due to fraud or error.