Pandora wrote:... auditors are largely clueless twonks...
I'm not going to argue against that penetrating analysis. More widely, though
blythburgh wrote:why didn't the auditors spot something?
What is often overlooked when a business fails is that primary responsibility rests with the directors and senior management. They were running the business, they prepared the accounts, they made the decisions.
The auditors' duty is to report whether the financial statements show a 'true and fair view' - that is on matters of fact they are accurate and on matters of judgement, the judgements made are reasonable. (That those judgements may turn out to be wrong does not mean they weren't reasonable at the time)
It was established in the courts long ago, that the duty of the auditor is to act as watchdog not a bloodhound - or less colourfully it is to verify the information provided and not to detect fraud unless given cause to suspect it.
That duty is owed almost entirely to the shareholders. The auditor has no legal obligation to the employees (or anyone else, for that matter) even though those people may be casualties of company failure.