What the hell were Auditors and Credit Rating Agencies doing?

What the hell were Auditors and Credit Rating Agencies doing all these years?

This is the question that comes to the fore while following the current global financial market meltdown.

Remember Enron and its auditors, the famous Arthur Anderson. Arthur Anderson was guilty by association and in fact aided and abetted the Enron management to commit a fraud on the shareholders and public at large. Arthur Anderson had to pay a heavy price for it, for they were asked to disband their operations.

I cannot accept that the Auditors of these Banks, both internal and external, were totally ignorant of what was happening all these years. If they were aware, then why didnt they bring it out to the open. The Auditors have a responsibility to the Shareholders, as it is the AGM that approves their appointment.

Similar question can be asked of the Credit Rating Agencies. These agencies, who are supposed to evaluate periodically the risk associated with the operations of the Financial institutions, did not reduce the credit ratings despite being aware of the risks involved in the business. Hence they are also guilty by complicity.

I have always held the belief that the Audit Firms, the Credit Rating Agencies and the ISO Certifying Agencies are not above board. They can never give a honest opinion as their bills are being footed by the very firms they are supposed to do a due diligence of. Imagine the Sales Tax inspectors salary being paid by the Shop owners (not formal salary, they do get regular monthly income anyway from shop owners and that is another story). In this scenario, can you expect them to penalize the shopkeepers for Sales Tax evasion.

It is time that the fee of the Auditors, Credit Rating Agencies etc are born by a Government Funded independant department. Or else, situations like the current one will crop up again and again.