If I got it straight, the international consortium of Grant Thornton is writing the check to settle up for the fiasco on the Parmalat audit.
You may vaguely recall that mess. In two sentences, Parmalat had a fake bank account in the Cayman Islands that supposedly held €3.95B (yes, four billion Euros, that’s 4,000,000,000) which was around half of the consolidated balance sheet of about €8B as of 12/31/03. The auditors in the Italian affiliate (if I recall correctly) of GT sent a confirm to the address the client gave them for the bank in the Caymans which was, of course, intercepted, signed by company staff, and returned to the auditor.
The scheme fell apart and has been rattling around in the legal system for just over a decade, in and out of the US and bouncing between circuits when here.
I discussed this fiasco back in August 2013: 3 bank confirmation frauds.
Hint for auditors:
You might want to do far more work than just send a confirm to the address your client provides when the balance of cash is somewhere in the range of half of total assets.
After all, verifying the address and controlling the confirm is required by GAAS. Doing a bit more than a mailed confirm for half the balance sheet would seem to be an extremely obvious further audit procedure if the thought of risk assessment even enters your mind. One final reason for doing more work on a g/l account containing a several billion number, which I mentioned in July 2014:
Here’s another reason to verify confirm addresses and think carefully during an audit: you don’t want to relive the bad audit for the next decade.
Can you picture the misery of the staff and partners who have dealt with this for the last 11 years?
One final motivation to do good work: What do you suppose the cost is for all this litigation? Over the course of a decade? At the appellate level?