As predicted, auditors now being sued for bank collapse

An earlier post suggested that one of the reasons the big firms of accountants are desperate to maintain the legitimacy of fair value accounting is the likelihood of being sued as a result of financial collapses. News in the title link that the process has started.

If there is official acknowledgement that fair value accounting promoted risky behaviour by banks, then it will be a lot harder for auditors to defend allegations that their financial statements were misleading, or that they were negligent in assessing whether clients were going-concerns.

Stand by for a rush of going concern qualifications on the financial statements of financial institutions.