ABSTRACT

The financial crisis of 2008 caught huge numbers of actors, both in the financial system and outside of it, entirely by surprise. A question repeatedly asked is “How did we not see it coming?” Part of the answer may lie in the inadequacies of the financial accounting information which was being made available, especially for banks and other financial institutions. In this chapter, we examine the whole question of the reliability and the relevance of financial accounting information and the role played therein by auditors, and how deficiencies in these may have contributed to the pre-crisis blissful ignorance. The deficiencies it will be argued are both technical and moral.