With the number of companies hitting the wall over the past 18 months or so, and possibly a few still to come, it seems that any recourse to get something back (if any) – through administration or liquidation, has to also contend with auditors who are typically paid out of the accounts of the companies they administer/liquidate, further reducing any possible payment to shareholders/creditors in that company. This can be further exacerbated when a BIG company hits the wall due to a number of ‘doggy’ dealings and the auditors could spend years finalising the company’s position.
I’m not suggesting that this is treated as a milking cow by the audit firms, yet I think this could be levelled at some, yet where a company that could go bust, has as much to lose as say ABC Learning, BNB, and some of the property funds an Audit Fund should be used to cover ‘reasonable’ costs of an audit firm and not payment direct from the firms they are investigating.
I know this could impose a cost on business, yet should there be an insurance amount paid by a company to an externally administered and run fund that audit firms apply to for payment when investigating companies that have collapsed?
Should this happen? Should it be set in law? Could it work?