Defense lawyers returned to the issue yesterday in an effort to show that bonus payments were either approved by Tyco's board and PricewaterhouseCoopers, its outside auditor, or, in this case, did not have to be publicly disclosed.
But the eternal question asked whenever a fraud surfaces — "Where were the auditors?" — does have an answer in this case.
But that doesn't mean the auditors are right or useful: especially in this case.
Interestingly, in this case internal auditors did warn management about the risk at the Singapore office months before the collapse, but the warnings went unheeded by top executives, and the audit report was ignored.
Given that what is under discussion is not social scientific research but, broadly speaking, the use of social science methods in the process of social life then we might consider the institutionalization of 'reflexivity' as a part of this process rather than, merely, a function of the researcher or, in this case, the auditor.
"Investors rely on auditors and are betrayed when auditors fail to conduct diligent audits," said Thomas C. Newkirk, associate director for enforcement at the S.E.C. "In this case, senior management was looting the company, and Scalzo was confronted with numerous warning signs about management's integrity.
A spokesman for the DCSF said: "We would have sent in internal auditors within the first two terms of any new academy or sponsor, but in this case problems were flagged up before that time".
In this case, he said, the charge sheet "clearly" spelled out the role of the auditors.
In this case, it took nearly a year after the claimed embezzlement began before Citigroup's internal auditors uncovered that millions of dollars were missing.
