Problem
We saw that the auditors of Enron, WorldCom, Xerox, and other companies approved financial statements even though the auditors either did not understand the financial statements, or else had actual knowledge that the financial statements were not fairly presented (i.e., did not constitute a fair presentation in all material respects of each company's financial position, results of operations, and cash flows).
What good is having generally accepted auditing standards if auditors do not comply with them?