Accounting Scandals Of The United States

1334 Words Oct 13th, 2016 6 Pages
In light of the accounting scandals that the American public companies experienced at the turn of the century, there was a need for an overhaul of audit standards to protect the shareholders and the general public from the fraudulent misstatement of financial statements. SAS No. 99, which supersedes SAS No. 82, became effective December 15, 2002 and is a basis for defining fraud and the auditor’s responsibility to investigate the potential for material misstatements contained within their financial statements and the possible failure of internal controls. Although, there has been some criticism to SAS No. 99 that some of the suggested processes are merely suggestions and not requirements. In my opinion, the overall statement does a solid job of allowing the auditors to gain reasonable assurance that their opinion is being based on a foundation of good substantive procedures.
There are several areas of SAS No. 99 that the auditor must follow in making sure they are doing their due diligence in presenting fair financial statements. The audit team is required to brainstorm prior to the engagement. The brainstorming session sets the appropriate “tone at the top” for the actual engagement. The session allows for free and productive discussion that addresses the professional skepticism required for any audit engagement. During these sessions the audit team will use the past audit experiences with the client and how best to incorporate testing methods to uncover any…
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