This is precisely it. An auditor that doesn't share in the civil and criminal liability is a complete waste of time.
In an ideal world investors would come to recognize quality auditing firms in the same way that we recognize quality manufacturing firms. These firms would demand a significant portion of the fee up front and would not sign off on the audit until they were satisfied that the company was, in fact, clean. The company being audited could then rest assured that their books were clean (internal embezzling is definitely a thing). More importantly they could attract more investment because they could show that their business had received a quality audit by a well known auditing firm. Failure to pass an audit, or an audit by a less well known firm would be met with skepticism from investors in the same way that you are skeptical of random misspelled brands on Temu.
A quality audit would simply the part of the cost of doing business for companies that wanted to be publicly traded. The reality is that investors already expect that to be a thing. This is witnessed not only by this case, but by the fact that the Tingo Group was able to raise billions in the U.S. stock market on the strength of an audit by Deloitte Israel. The proper response would be for the auditors to be held liable for those things that they should have uncovered with a proper audit. In the long run this would probably be good for the auditing firms. Sure, they would be on the hook for poorly done audits, but publicly traded companies would basically be required to pay for comprehensive audits. Quality auditing firms, with good reputations, could charge more for audits, and could do the work necessary to guarantee that the books were clean (or at least that the fraudsters were consistently fraudulent). Misleading auditors should carry criminal penalties so that if companies did trick their auditors the auditors would be able to hand over their books to law enforcement to allow for easy prosecution in criminal cases. These quality audits would be worth the effort to companies seeking the greater capital that the market gives.
Companies that didn't want to pay for quality audits could get the amount of auditing that they wanted to pay for, but investors could see this as a red flag. At the very least auditors could serve as an insurance backstop. Before investing you could take a look at the company auditing the company you wanted to invest in to make sure that they had the resources to back up their audit.
None of this is even remotely controversial actually. In fact, it is the only reason that auditors should even exist, and it is definitely what investors expect from an audit. What is the point of an audit where the auditors can't be held liable, or at least if the audit can't be later used to show who acted in a criminal manner. Almost by definition audits should show that the books balance, or should at least point the finger at the responsible parties in the case of fraud.
In recent times there have been a string of huge frauds perpetrated against companies where the fraud could have been caught with a minimum of proper auditing. As an example, Trafigura had to write down nearly half a billion dollars as they found that a significant number of their nickel shipments were just useless rubble instead of nickel ore. You can be sure that company will be more careful in the future.
Proper auditing definitely is worth the money spent on it. Investors need the information provided if they are going to make informed choices. As fraud mounts companies that do their due diligence will stand out in the market. If the law doesn't require proper audits, then some auditing houses will almost certainly take it upon themselves to guarantee proper audits as part of their service, and auditing insurance will become a thing. It will then be up to the investor to prefer properly audited companies. Unfortunately, in a world where Sam Bankman Fried can trick people out of billions of dollars by promising ridiculous returns I am afraid that stolid businesses will always have a hard time getting the investment they deserve.