When it comes to accountancy firms speaking to the unspeakable, you have to laugh or you’d cry: in the Comptronix Corp case (CI No 2,073), the Wall Street Journal quotes Howard Schilt, an accounting professor at American University, who has studied the company’s accounts since the storm broke saying that they were full of red flags and that if you compare them with those of other contract manufacturers in the computer business, sales grew far faster than receivables, and its ratio of sales to receivables was way out of line with those of competitors; and the sales figure in relation to plant and equipment were unusually low – and inventory turnover was far lower than that of its peers, which raised big question marks over its fast growth; the auditor, KPMG Peat Marwick, which quit last month, says only that it was the victim of a sophisticated scheme said a spokeswoman, these are people who knew the accounting rules inside and out and knew what documentation would be needed in a test to fool an auditor.
