The Washington Post reports that Harvey Pitt, the outgoing chief of US regulator the Securities & Exchange Commission (SEC), suggested this week that a special squad of 'forensic' fraud auditors should perhaps be established in order to help detect corporate fraud. This unit would be independent of a company's regular auditing firm.
The proposal is one of several currently put out for public comment before US lawmakers pass comprehensive legislation next July which is designed to prevent futher large corporate accounting scandals.
The so-called 'forensic auditors' could be called in by a regular auditor if they want a second opinion on an issue causing concern and would also provide a super-check on the activities of the external auditors - in other words, the initiative may help to keep the profession 'on its toes'.
Critics point out that the whole idea is likely to be costly to introduce and some wonder what it all implies. The Post quotes Lynn Turner, a former chief accountant at the SEC, who said that the idea was 'a cop out....It's the job of the external auditors to do the audit. If you're saying that they are not up to the job, then....my question is 'Why do I have them in the first place''.