Risky business.

• Author: Peters, Charles
• Position: Tilting at Windmills

One reason for the accounting scandals of recent years is something called the "risk-based audit" An example of how it works is provided by Jonathan Weil of The Wall Street Journal:

When Ernst & Young accountants took a look at Health South's 2002 financial statement, they asked the hospital chain's executives "if they were aware of any significant instances of fraud." The answer was no. "As a...