The Committee For The Equity Funding Among Other Scandals

In the Sarbanes-Oxley Act of 2002, the audit committee is responsible for adequate supervision and reporting and for responding to:

2 Managing fraud risk: The audit committee perspective Fraud in a fi nancial statement audit

This case established that an auditor could be sued by a primary beneficiary for damages from negligence. A primary beneficiary is a party that has a direct benefit from the audit. Non-privity parties could also sue for gross negligence. This increased the auditor’s legal exposure to third parties. The SEC of 1934 reflected these changes and many others; one significant change was that auditor’s had a much higher litigation risk due to their new responsibility to third parties.

‘There has been a worldwide demand from regulators, investors, businesses, and auditing firms for a single set of high-quality, globally-accepted accounting standards. The American Institute of CPA’s (AICPA) believes U.S. adoption of a single set of high-quality, globally accepted accounting standards will benefit U.S. financial markets and public companies by enabling preparation of transparent and comparable financial reports throughout the world” (aicpa.org).

The readers should read this specific study to understand corporate fraud. Corporate fraud occurs more regularly than one may think, therefore, understanding what corporate fraud is and the history surrounding it would allow companies and accounting professionals to understand how to help prevent it from occurring within their workplace. In addition, the research provides vital information and history regarding SOX, PCAOB, and AICPA and the rules and regulations required with financial statement reporting and how to better implement rules and regulations to make the company a safer place of business. The research is also vital to companies and accounting professionals as it explains the type of people that commit financial statement fraud

In conducting this report, it became clear that significant flaws were present with the old regulations regarding statutory reform. These issues created audited financial statements which investors were never fully confident with trusting, as well as creating many opportunities for the independence of auditors to be compromised.

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.

Research on SEC Enforcement Actions (1987-1997) by Beasley, Carcello and Hermanson concurred with this assessment, indicating that 60% of the enforcement actions were related to a lack of professional skepticism (AICPA 2000). and that "people failure" is the most common cause of audit failures (Choo and Tan 1998). In response to the SEC 's concern about the quality of financial audits, the Public Oversight Board established a panel that recommends recommended to audit firms that they provide guidance to their audit personnel about the concept of professional skepticism (POB 2000). Thus, understanding the role of professional skepticism in workpaper review may provide important insight into a recognized problem within the audit profession.

The Accounting profession is distinguished by the heavy demand placed upon its practitioner to adhere to laws, standards, regulations and best practices. Any failure to do so may result in financial loss, economic oversights and even legal penalties. As a result, it is incumbent upon the accounting professional to recognize and abide the external influences that help to define the field. Distinct political, economic and cultural factors converge to define practice within the accounting profession.

Auditors face greater battles than deciding how to record debits and credits, or attempting to balance their stakeholders’ interests. The most important struggle occurs in the mind of every individual auditor, regardless of rank or status. The issue at hand involves an auditor’s duty to practice professional skepticism. Although it may seem easy to remain skeptical as an auditor, in reality, they face numerous barriers to fulfilling this duty. These barriers include but are not limited to: challenging high rank individuals both within the audit firm and at the client company, time constraints, budget constraints, fatigue and personal health concerns, lack of personal knowledge or skill, desire to please certain parties, and intimidation from others. First and foremost, this discussion will elaborate on both the time and budget constraints to professional skepticism, as they tend to go hand in hand. Following, the second section of this discussion will highlight a personal experience of applying professional skepticism throughout a winter quarter auditing internship. Third, as described in PCAOB Audit Staff Practice Alert No. 10, the PCAOB plans to explore meaningful ways to enhance auditor’s professional skepticism. Therefore, contained in section three is a proposal which provides justification for an implementation that may enhance the application of professional skepticism throughout the auditing profession. In culmination of discussing these examples,

SAICA, SAIPA, CIMA and the IRBA are just a few of the professional bodies, or institutions, found in South Africa with the purpose of developing and maintaining the professional standard of Chartered Accountancy perceived within this nation. The real question is though, how do they do it? Especially in such a way that sees South Africa renowned for the top seat in Chartered Accountancy standards. To understand how this feat is achieved it is important to first know what a profession is: A profession is an occupation organized in an institutional form, its members offer client services based on an intellectual body of knowledge and a specialised repertoire of skills, that are not ordinarily possessed by the non-professional, in order to explicitly serve public interest. (Lee. 1995, 49) These members are, in addition, required to practice and behave in an ethically and functionally sound way as set out by the

Over the years, the role of auditors become increasingly important especially in a capitalist economy as the process of wealth creation and political stability depends heavily upon confidence in processes of accountability and how well the expected roles are being fulfilled. An auditor has the responsibility for the prevention, detection and reporting of fraud, other illegal acts and errors is one of the most controversial issues in auditing. The most frequently debated areas amongst auditors, politicians, media, regulators and the public is where the fraud is coming from and by whom. This disagreement has been especially tinted by the collapse of big corporations like Enron and

* Ethical standards: the New Zealand Institute of Chartered Accountants Act 1996 requires that NZICA have a code of ethics that governs the professional conduct of its

Abstract:Professional competence is one of the fundamental principles of the Code of Ethics for Professional Accountants.However,more and more firms accept engagements without enough competent professional skills,which turns out that,there are so much problems they can 't figure out or deal with,at last,they have to take the legal liabilities.Along with the expositions of fraud made by listed companies.The public become suspicious about professional competence of the certified public accountants.Because of the indignant denouncement of the investors,their prestige drops to

In Ireland, the Irish Auditing and Accounting Supervisory Authority (IAASA) was set up conformity to the provisions of Part 2 of the Companies (Auditing and Accounting) Act, 2003 (the Act). IAASA’s objectives under section 8 of the Act include the supervision of how the recognized accountancy organizations control and monitor their members and the promotion compliance to high professional standards in the auditing and accountancy profession