Fraud used to consist mainly of one-step trickery, in which the cheating depended on exchanging two quite different things―good cash for, say, a bad check. Today all the cleverest frauds involve two-step transactions, in which the losing party ends up with exactly what he had at the outset―all the cheating is in the timing. Which means we're going to have to rethink what we expect from public auditors. Their mission, as traditionally defined, is now obsolete. Pretending otherwise is a confidence game in itself. The old fraud was writing a bad check or variations on the same idea: Take something valuable, leave something worthless to fill the void. People who were in a position to control appearances―bookkeepers, for example―could keep such frauds going for quite some time. The independent auditor was brought in to ensure that appearance matched economic reality. If the company's books said there was a million dollars in the bank, the bank statement had to say so, too. The audit was a snapshot. It verified that the company owned what it said it owned and did not owe any more than it said it owed.
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