Auditor’s Responsibilities in Fraud and Error Detection Auditing October 17‚ 2011 Auditor’s Responsibilities in Fraud and Error Detection In recent years‚ scandals such as Enron and WorldCom have not only brought up the question “Where were the auditors?‚” but have also brought to our nation’s attention that auditing of public companies must be done with more precision and must have guidelines on the proper way to account for different items. Fraud‚ illegal acts‚ and errors happen every day
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2006‚ all publicly-traded companies are required to submit an annual report of the effectiveness of their internal accounting controls to the SEC. It came as a result of the large corporate financial scandals involving Enron‚ WorldCom‚ Global Crossing and Arthur Andersen. Provisions of the Sarbanes Oxley Act (SOX) detail criminal and civil penalties for noncompliance‚ certification of internal auditing‚ and increased financial disclosure. It affects public U.S. companies and non-U.S. companies with
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regulatory requirements of financial practice and corporate governance for all publicly traded companies in the United States. The SOX act is composed of eleven titles and includes important provisions such as Section 404 that deals with reporting of internal control processes by corporate management and the creation of The Public Company Accounting Oversight Board (PCAOB) Prior to the inception of the Sarbanes-Oxley act‚ financial reporting regulations for firms and corporations were less stringent. Companies
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but more importantly the general public. In the past we have witnessed some of Americas high ranking publically traded corporations crumple due to shady accounting practices. The collapse of companies like Enron destroyed the lives of thousands of hard working people who lost everything. Enron literally shook the financial world with their use of unethical accounting practices‚ hiding losses‚ claiming profit from assets with no profit at all as well as numerous write offs. In response to this tragedy
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Paper was prepared for Management Information Systems SMT 273754 taught by Professor Catherine White. Abstract This research paper will show the impact of information technology and information systems on the accounting profession. It will focus on internal and external auditing practices as well as the expansion of career opportunities in the accounting field. The information provided will be useful to decision makers of organizations in understanding the auditing process and to those looking to pursue
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the act and the need for such legislation. The second section provides an introduction to the Sarbanes Oxley Act section 404 which explores the provisions of Section 404. The next section on ‘Internal Controls Feature of section 404 of the Act’ provides an interpretation and the implication of internal control and the consequences that SOX 404 has on company affairs and the changes it has necessitated is discussed. The accounting profession and practice is affected by the provisions of SOX 404 and
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accounting scandals like Enron‚ Tyco‚ and WorldCom in the early years of 2000. These scams shook the confidence of the investor in financial statements and demanded the need for overhaul regulatory standards. Under Sabrnes-Oxley Act‚ executives must certify the internal control of their organization. Internal Control is an inherent part of this act as it requires strict guidelines of standards to be met (The
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auditors (both internal & external) to provide written assurance on a subject matter using a series of auditors’ reports issued simultaneously with‚ or a short period of time after‚ the occurrence of events underlying the subject matter‖ (Searcy and Woodroof‚ 2003). 7 At the turn of the new millennium‚ the implementation of a continuous auditing system for business organizations has been taken into consideration‚ with emphasis in the corporate business environment. The Enron‚ Worldcom‚ and
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The Sarbanes-Oxley Act The Sarbanes-Oxley Act of 2002(SOX which is also known as the Public Company Accounting Reform and Investor Protection Act was enacted in July‚ 30‚ 2002 as a prompt response to the financial crimes scandals (Adelphia‚ Enron‚ WorldCom‚ Peregrime Systems ‚ Arther Anderson and Tyco International). SOX establishes new‚ stricter standards for all US publicly traded companies. It does not apply to privately companies. The Act is administered by the Securities and Exchange Commission
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30th July 2002‚ also known as the Public Company Accounting Reform and Investor Protection Act of 2002 and commonly called SOX or Sarbox. This law was passed in response to a number of major corporate and accounting scandals including those affecting Enron‚ Tyco International‚ Adelphia‚ Peregrine Systems and WorldCom. These scandals‚ which cost investors billions of dollars when the share prices of the affected companies collapsed‚ shook public confidence in the nation ’s securities markets. Named after
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