There are auditors that business-people know to trust less? Then why do they exist? I guess because most consumers don’t know enough to downgrade trust?
Maybe the big 4 are enough more expensive that it’s common for people to go with other firms for reasons other than “we’re doing fraudulent stuff and hope to sneak it past auditors”? And so even if you would be able to afford one of the big 4 it doesn’t send a strong signal by going with someone else?
Yeah my thoughts exactly. Or, it doesn’t send a big signal to non-finance people. But like, I think it should send a signal to people in finance, eg the auditors. That FTX should have been able to afford a different service and yet didn’t. Or maybe, idk, should have revealed their internals for different certification (better than GAAP cert idk, I know nothing). I just think it should have raised flags for the auditor. If someone is enlisting you for purposes of increasing trust but they are clearly not doing their damnedest, according to their abilities, to ensure that trust is accurate. The US consumers can’t be expected to know the difference, but the auditor should. I think.
In general, standard corporate audits aren’t intended to be intelligible by consumers but instead by investors and regulators. It’s shocking that FTX’s regulator in the Bahamas apparently did not require a clean audit opinion addressing internal controls, and maybe no US regulator required it for FTX US either.
At present, my #2 on who to blame (after FTX insiders in the know) is the regulators. It’s plausible the auditors did what they were hired to do and issued opinion letters making it clear what their scope of work was in ways that were legible to their intended audience. I can’t find any plausible excuse for the regulators.
That makes sense. It is really shocking. I agree on blaming regulators [although I don’t give others a pass].
[I think a section on regulations def belongs from the POV of improving world models too. Before I added my long thinking-out-loud footnote, I didn’t realize just how much it all points at regulators as the original permissiveness break.]
Maybe the big 4 are enough more expensive that it’s common for people to go with other firms for reasons other than “we’re doing fraudulent stuff and hope to sneak it past auditors”? And so even if you would be able to afford one of the big 4 it doesn’t send a strong signal by going with someone else?
Yeah my thoughts exactly. Or, it doesn’t send a big signal to non-finance people. But like, I think it should send a signal to people in finance, eg the auditors. That FTX should have been able to afford a different service and yet didn’t. Or maybe, idk, should have revealed their internals for different certification (better than GAAP cert idk, I know nothing). I just think it should have raised flags for the auditor. If someone is enlisting you for purposes of increasing trust but they are clearly not doing their damnedest, according to their abilities, to ensure that trust is accurate. The US consumers can’t be expected to know the difference, but the auditor should. I think.
In general, standard corporate audits aren’t intended to be intelligible by consumers but instead by investors and regulators. It’s shocking that FTX’s regulator in the Bahamas apparently did not require a clean audit opinion addressing internal controls, and maybe no US regulator required it for FTX US either.
At present, my #2 on who to blame (after FTX insiders in the know) is the regulators. It’s plausible the auditors did what they were hired to do and issued opinion letters making it clear what their scope of work was in ways that were legible to their intended audience. I can’t find any plausible excuse for the regulators.
That makes sense. It is really shocking. I agree on blaming regulators [although I don’t give others a pass].
[I think a section on regulations def belongs from the POV of improving world models too. Before I added my long thinking-out-loud footnote, I didn’t realize just how much it all points at regulators as the original permissiveness break.]