Are audits a waste of time & money without Sarbanes-Oxley? I would never have questioned the value of an audit without SOX until I saw Grant Thornton's comments today.
The article by Sarah Johnson from CFO.com is appalling. A good audit consists of many things including reperforming reconciliations, tying those back to the trial balance & bank recons, and verifying the support for legitimacy and accuracy. This is the same for journal entries; they must all be supported and tie to the general ledger. If something looks suspicious, you investigate. If something doesn't tie, you investigate. That is the role of an auditor. How could Grant Thornton not take any responsibility here? $31M in fraud and they saw nothing. Internal controls could have helped the company for sure but that does not mean that an audit is good for nothing and it was just because 404(b) hadn't kicked in that made the fraud possible. Or, perhaps I am incorrect. Perhaps the only time an audit has value is when it includes a review of internal controls i.e., a SOX audit.