Auditors Must Face Their Failures and Set Up Controls That Work

Being a corporate whistleblower is no fun. History shows that many managers, rather than being grateful, react to a claim of financial irregularity with denial, or even a demotion. The most open-minded are likely to refer the information to their outside auditors or lawyers for investigation. But even then, the path does not always run smoothly. Consider the experience of the former Monsanto insider who raised questions about the way the agricultural chemical company was accounting for rebates aimed at boosting sales of its top-selling Roundup pesticide. According to his lawyer, Stuart Meissner, the company’s auditors at Deloitte dismissed his concerns and defended the accounting. The insider then went to the US Securities and Exchange Commission, who eventually forced Monsanto to restate three years of earnings and pay an $80m penalty. This week, the insider got his reward: a $22.4m award from the SEC’s whistleblower programme for helping uncover a “well-hidden fraud”.