The economic crisis is having an impact on financial statements and auditors with Britain's Financial Reporting Council (FRC), as reported here, warning that accounting firms could sacrifice audit quality when they're cutting costs and scrambling to get more cash in through the door.

In fairness, the FRAC didn't find any evidence of this happening but it did not a few things. Like for example PricewaterhouseCoopers changing its bonus criteria, changing its KPIs so that there is less focus on audit quality and more on business growth.

It's impossible to criticize firms for doing this when there has been no sign of a drop in audit quality, at least so far. But when the next company goes bad, and when it appears the firm had ignored the warning signals to save costs, questions will be asked. Reputations will be trashed and the damage will be done. It's all avoidable.