The CPA’s Role: Misunderstood by Leaders, Exploited by Scandals

Why Financial Scandals Keep Happening—Even in Well-Regulated Markets

Mike J. Masoud
February 21, 2025

It is a disgrace when corporate board members, politicians, ministers, and legislators remain ignorant of the fundamental role of a Certified Public Accountant (CPA). Alarmingly, many fail to grasp that a CPA’s contractual duty, when engaged to audit historical financial statements, is solely to express an opinion on those statements and enhance their credibility. The CPA evaluates whether the financial statements prepared by management comply with an established financial framework. However, the CPA is not responsible for detecting fraud or corruption unless such misconduct is material to the financial statements.

Yet, time and again, financial scandals—such as Wirecard and Theranos—have unfolded under the scrutiny of one or more firms belonging to the so-called "Big 4." These scandals erupted in developed markets, where regulatory oversight is presumed to be robust. Now, consider the implications for nations where corruption is not an anomaly but the norm. What happens in countries where trust in the banking system is so eroded that individuals resort to keeping their savings at home rather than in financial institutions? The reality is chilling, yet it is one that continues to be ignored at great peril.

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