It's important to remember that the deal was audited by Ernst&Young and they didn't notice the hundreds of millions missing from the balance sheet.
EY later settled in court at 300 million but never admitted any wrongdoing. So much for the reputation of the "big four" which at the time was still known as "big five".
After having read a number of school board “audits”, and read about Enron etc, and looked beyond that to other instances, it’s clear that audits are generally worthless as a rule. The auditors are shown what they are shown and not allowed to color outside the lines.
Find a discrepancy and every damn time the auditors will say “oh, that information was not provided to us”.
It’s like if you hired a judge for your own prosecution. What judge is going to find you guilty?
On the other hand, an audit that makes your customer look good to their customers is great for repeat business. The trick is checking for things that people actually care about, rather than box-checking activities.
EY later settled in court at 300 million but never admitted any wrongdoing. So much for the reputation of the "big four" which at the time was still known as "big five".