How does a credit rating differ from an audit?
A credit rating agency relies on a variety of information sources including published annual reports, meetings with the issuer’s management, industry data and discussions with bankers. Though rating agencies carry out due diligence on this information, it does not always amount to the kind of verification that is carried out by an auditor. A credit rating depends significantly on the quality of information on which it is based. Also, the credit rating process may not be able to detect fraud or misrepresentation of information – something that an audit is designed to detect.
