From Mr Charles Tilley.
Sir, We were interested to read the conclusions of recent research in the Netherlands into high-profile business failures that it is management fraud rather than issues relating to the role of the auditor that is the important factor in a significant number of cases ("New light on the true causes of business failures", October 21). We welcome the conclusions of this research, since we believe they have important implications for policymakers, particularly in Europe. However, the article's conclusions appear to overlook the striking fact that over two-thirds of the cases failed for legitimate reasons, ie, "the risks of entrepreneurship". When the Professional Accountants in Business (PAIB) Committee of the International Federation of Accountants undertook similar research in 2003, it concluded that issues such as poor performance and weak strategy were significant factors. In contrast to the Dutch research, the PAIB research concluded that such failure represented an enormous amount of investors' money lost and that this could not simply be overlooked or accepted as the inevitable cost of doing business.
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