Auditors without professional borders

The bank had allegedly removed tens of billions of dollars of fixed income securities from its balance sheet to hide its dire financial situation.

EY had audited Lehman Brothers from 2001 until the bank's bankruptcy in 2008. It had consistently given the 'thumbs up'. EY's audits were useless.

I do not suggest Australian accounting firms are conducting themselves like Arthur Andersen and EY, in those two cases. But when auditors and professional services contractors become 'defacto employees' and their commercial interests are inimical, objectivity and probity may suffer.

The parliamentary inquiry will listen to a number of solutions including introducing legislation to prevent an audit firm offering auditing and consulting services to the same client, imposing a limit on the number of years an auditor can audit a company, and the creation of a separate regulator.

It's a matter of trust.