Reply #24: The WORST rating an auditor can give is "unauditable" or "no opinion." [View All]

[TahitiNut]

Such ratings mean that the state of the records ("audit trails") and internal controls are such that there's no reasonable assurance that an audit can even be performed reliably. Such ratings signal the high potential for a cash hemorrhage. (The actuality often can't be determined.)

In my years as an audit principal and manager at two Fortune 50 corporations, we only issued one "unauditable" rating out of many dozens of audits in which I participated. It was a depth charge - since executive management, no matter how dense and corrupt otherwise, knew damned well that was serious stuff. Both companies were traded on the NYSE and the NYSE has some rules about internal controls and internal audit functions that they actually give a damn about.

When such ratings become banal, it's catastrophic.


It's worth noting that background checks and a diligent recruitment and hiring process is another fundamental management control. Since no management control can protect against collusion, some degree of reliance on employee intergrity is essential - and vacations should be REQUIRED.

Since it's clear that they even failed in this regard, I put the blame in the lap of executive management ... whomever bears the executive authority over this agency. It's unforgivable.