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The Big Four by Stuart Kells, Ian D. Gow

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10

CLEAN

The impairment of Big Four auditing

Is it all too hard?

The complexity of modern corporations is often put forward as a principal cause of the rich tableau of audit failures. The Royal Mail case was an early example of auditors trying to come to grips with complexity. The enterprise in question consisted of a large and diverse group of international shipping and trading businesses. Multiple subsidiaries transacted with the parent company in multiple ways. The parent and its subsidiaries maintained a complex set of reserves. Complicated transfers between those reserves were ultimately what concealed Royal Mail’s significant trading losses. Thanks to the company’s structure of divisions and accounts, it was – in the words of Edgar Jones ...

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