So the famous and big accounting firm, Ernest & Young admitted its audit back in the early 1990's of bankrupt Japanese consumer electronics firm, Akai, a subsidiary of a HK firm, Semi-Tech, was in error. Ahem. We now know for sure creating accounting did not start big US firms before and during that big boom and now bust in this century.
I knew that case. I even knew that crook, James Ting, who founded Semi-Tech. Never bought a share since I didn't trust an entrepreneur with a soft hand shake and shifty eyes.
Prior to being a big time crook, he was by all accounts a regular Joe professor in Canada doing research and writing papers few would read. Then he discovered the stockmarket. More important he discovered the wonderful world of investment banks and brokers who make a living by selling, or passing on stuff, to "investors". And he also discovered the friendly auditing firms who competed tooth and nail for a big corporate account. Lots of fee incomes. Accountants live on chargeable fees the way lawyers do.
Remember the US rating agencies? They too live on fees. Remember Wall Street firms? Yes, them too. You get the picture.
So Semi-Tech went bust because the numbers certified by reputable accounting firms were bogus. James Ting went to jail for cheating, but got off after serving only 2 years on a technicality. Ah, the wonderful world of Law in the West.
The full article on this sordid episode is here.