The accounting firm Deloitte audited the nationalized Spanish bank Bankia before it went public, and now the Institute of Accounting and Auditing (ICAC is the abbreviation in Spanish) is questioning whether the audit was unbiased and an accurate assessment of the bank's creditworthiness and valuation. The ICAC has found an uncomfortable number of accounting errors in the audit.
Upon detecting this kind of infraction, the ICAC should increase its controls and requirements in order to do away with bad accounting practices.
There are myriad examples of struggling companies that received a favorable audit becuase some aspects of their balance sheets were overlooked. The ICAC should stand firm as it corrects this kind of action and ensure that doubts about the banking sector's health do not spread further.
