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Corporate Blinders
Filed in archive Accounting by leon on February 22, 2006
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With KPMG still fighting to hose down trouble over its tax shelters the firm has been dragged over the coals again. This time, the Securities and Exchange Commission is taking action over two of its auditors who had failed to see "red flags" in their audit of US Foodservice Inc. The Dutch parent company, Royal Ahold NV, had settled fraud and other charges with the SEC back in 2004.

So why do these blinders keep happening? Harvard Business School professor Max H Bazerman and Dolly Chugh look at blind spots in their thought-provoking article Decisions Without Blinders.

I have also done some further analysis of blind spots that plague managers and stop them seeing the bleeding obvious. The trouble is organisations often have systems that encourage myopia. Examples include the big bonuses that have managers focusing on short term issues instead of the long-term.

Permalink: Corporate Blinders
Tags: KPMG  Ahold  red  flags  Securities 
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