When KPMG LLP awarded Silicon Valley Bank a clean health insurance policy,
14 days before the lender collapses, audit firms of the Big 4 flagged the potential loss of loans as a so-called material audit issue.But the audit opinion was silent What actually caused the bank to go bankrupt— Unrealized bond losses and the ability to retain them, given their reliance on potentially volatile deposits.
“The auditors did not mention the fire in the basement or the dynamite box on the ground floor, but they did mention the peeling paint on the flower box.” Eric Gordon, Professor of Business at the University of Michigan. “How could they overlook the interest rate risk?”
https://www.wsj.com/articles/auditors-didnt-flag-risks-building-up-in-banks-6506585c?mod=rss_markets_main The auditor did not flag any accumulated risk in the bank