The Fraud Triangle: Fraudulent Executives, Complicit Auditors, and Intolerable Public Injury Paperback - 2010

The Fraud Triangle: Fraudulent Executives, Complicit Auditors and Intolerable Public Injury by Allan Littman explains why so many huge executive frauds escape disclosure by the major professional auditing firms who supposedly guard the public against them. Early in the 20th century, the modern auditing profession began to suppress its original primary duty to detect and expose fraud in favor of providing more non-audit services to management. Partial reinstatement of the duty to detect fraud in 1989 still leaves gaps, and the auditors' duty to expose fraud they have detected remains minimized. The result has been that, too often, the best guardians against fraud have covered it up. The blame is also shared by those who accepted fallacious excuses from the audit profession and major audit firms. They include all three branches of the Federal Government, financial institutions, and others. While the immediate victims are thousands of shareholders, creditors, and employees, tens of millions more may also suffer collateral damage as credit dries up and jobs decline as they have in the sub-prime mortgage derivative securities crisis that began in 2007, and many before that. This book should be read by all those interested in the causes of the present debacle and in reducing the chances of its repetition.