When the auditor feels obliged to put ink to paper in order to transmit concerns to his client's board regarding the probity of the accounts it is frequently the Start of Something Unpleasant. This is the there's-never-but-one-cockroach rule.

BDO Stoy Hayward wrote to the Torex board with such worries in mind days after the interims. They took the chance to also pass along the confidence inspiring news that they were “continuing to give due consideration to our position as group auditors”.

Ass covering manifests itself in numerous guises. Unfortunately for BDO this is one of them. If fraud has occurred it may turn out that they were duped; they may have gone native; or otherwise been kept ignorant. But the style and magnitude of alleged accounting fraud is such that it is prima facie difficult to accept it went wholly undetected by the gamekeepers over a period during which Torex was acquiring businesses and debt frenetically. However, it is always possible that this may still prove to be the case.

Auditors have a thankless job. They show up, take sample transactions, ask for year-over-year data, pose uninformed (usually) questions regarding variances and are regarded (frequently) by their clients as supremely overpaid pains (“£120,000 for fees? Man, I just met you”). Auditors know all of this. They also know they don’t want to lose clients by being (or at least appearing) too strict. It is an often boring yet legally precarious existence from which many audit staff, understandable, turn poacher.

But BDO may not deserve bad press. From their website, a nice graphic and encouraging blurb:

Graphic refers to reported UK business fraud
We have the experience, skills and discretion needed to uncover fraud and protect your business…The cases we have worked on range from a few thousand pounds to multi-million pound international frauds…Our dedicated team of investigators are highly trained interviewers who can think laterally and ferret out the truth.
"Think laterally and ferret out the truth" – nice phrasing and a cutesy USP in the circumstances. But can they do it in a timely manner?

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