@ Jexxo: I think the point is that regardless of what auditors safeguards auditors put in place now the problems will come of i) existing litigation (e.g. Parmalat for Deloitte) and ii) incompetence / collusion in the case of fraud that has already happened, but that becomes exposed in the coming months (like Madoff and Raju have already been). I don’t think you can simply dismiss the risk of litigation as scaremongering, regardless of how much authors use it to tout their own views on the place of the big four or the audit practice.
The risk to big four firms is clearly shown by Anderson, but when I asked about this at PwC my interviewer said that she thought that the recent scandals didn’t pose the same risk to the global firm as Enron did. So for example although Satyam could bring down Pricewaterhouse in India, the collapse wouldn’t feed through to the US / UK firms. She was an HR person, so couldn’t provide more detail than that and think it was a trickle down message from the upper management. Have they been fiddling with the legal structure of the global firms? Can any of the current big 4 (esp PwC) employees provide more info?
And does know what’s likely to happen to trainees’ contracts, in the event that their firm does get sunk by litigation?