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Audit Integrity has identified ten companies that failed its “due diligence test” and whose valuations are based on a degree of investor trust that may not be justified.

In a Chairman’s Corner letter, Audit Integrity’s Jim Kaplan cites the recent scandals involving Bernie Madoff, Lehman Bros, Goldman Sachs and the ratings agencies along with the the due diligence effort that would have protected stakeholders from being damaged.

The obvious rule of thumb is to obtain independent third-party verification before investing. That is neither hard, expensive, nor time-consuming – and avoids continuous head-slapping.

Audit Integrity’s list includes big names such as Caterpillar (NYSE:CAT), which recently reported strong earnings and also a management shakeup.

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Source: Audit Integrity Lists 10 Companies That Failed Its Due Diligence Test