What happens when your auditor is a fraud?

In the post-Enron era, the reputation of corporate accountants collectively has taken some massive hits. The on-going financial crisis certainly isn't helping. So it is with some chagrin that we note the story of Thomas Flanagan, a 30-year veteran Deloitte & Touche. The firm accused Flanagan of improperly trading in the securities of at least 12 companies that he had advised over the past three years, reports CFO.com. He attended audit committee meetings of at least seven of these clients. In September, Deloitte told affected clients of the activity, leading some to question whether Deloitte's ability to perform as an auditor was impaired. Walgreen, Allstate and USG all investigated, at their own cost, and ultimately decided to keep the firm as auditor. Still, it looks like Deloitte has a controls problem of its own.

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