英文版：审计学 变化环境中的概念 第二章

What is the enhanced role of audit committees under Sarbanes?
Is designated as the audit client Has oversight responsibilities over the internal audit and financial reporting processes Must be comprised of "outside" directors, i.e. not members of management or have other relationships with the organization Must report on its activities, including the results of significant discussions with the external auditor
The Sarbanes/Oxley Act of 2002 Continued
Audit Committees must have at least one person who is a financial expert. Other members must be knowledgeable in financial accounting and control Audit engagement partners, as well as other partners and managers with significant roles in the audit, must be rotated off the engagement every five years A "cooling off" period before an audit partner or manager can take a high-level position with an audit client without jeopardizing the independence of the public accounting firm Increased disclosure of "off-balance sheet" transactions or agreements that may have a material effect Requires the GAO to study a number of issues including the effect of consolidation on competition with the accounting profession, and an analysis of mandatory audit firm rotation
What are auditor independence provisions?
Prohibits audit firms from performing consulting work for their audit clients (in most cases) Makes the Audit Committee the auditor's client Requires the Audit Committee to pre-approve any non-audit services by the audit firm Requires partner rotation on all public company audits every five years
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Discuss Corporate Responsibility for Financial Reports
Sarbanes/Oxley Act requires the CEO and CFO to certify the accuracy of the financial statements and provides criminal penalties for misrepresentation The Act also- Requires management to describe whether they have implemented a Corporate Code of Conduct Requires management to report on the effectiveness of internal control over financial reporting
What are the Public Oversight Board (POB) concerns?
Analytical procedures used inappropriately to replace direct tests of account balances Audit firms not thoroughly evaluating internal control and applying substantive procedures to address weaknesses in control Audit documentation, especially related to audit planning, did not meet professional standards Auditors ignored warning signs of fraud and other problems Auditors were not providing sufficient warning about companies that might not continue as 'going concerns'
List primary parties involved in corporate governance
Stockholders Boards of Directors Audit Committees of the Board Management Self-Regulatory Accounting Organizations (e.g. AICPA, FASB) Other Self-Regulatory Organizations (e.g. NYSE, NASD) Regulatory Agencies (e.g. SEC) External Auditors Internal Auditors
Sarbanes/Oxley granted the PCAOB broad authority including the power to
Set auditing standards - the PCAOB has chosen to set auditing standards Set financial accounting standards - the PCAOB has chosen to let the FASB continue to set accounting standards Set standards for the reports on internal control and risk management Perform quality reviews of public accounting firms and recommend penalties if the firms fail to perform Establish quality control standards for the audits of public companies Require all public accounting firms that audit public companies to register with the PCAOB and become licensed to perform such audits
What are SEC concerns regarding the auditing profession?
Auditors were no longer willing to confront clients over questionable accounting practices Consulting fees were impairing auditor independence Accountants were using technical interpretations of GAAP to push the limits of accounting
Audit committee responsibilities include
Be appraised of all significant accounting decisions made by management Be appraised of all significant changes in accounting systems and system controls Have authority to hire and fire the external auditor Review the audit plan and discuss audit results with the auditor Have authority to hire and fire the head of the internal audit function and set the budget for the internal au discuss all significant results Receive all regulatory audit reports and meet with regulatory auditors to discuss findings
Chapter 2
CORPORATE GOVERNANCE ENHANCING THE AUDIT FUNCTION
Define Corporate Governance
"a process by which the owners and creditors of an organization exert control and require accountability for the resources entrusted to the organization. The owners (stockholders) elect a board of directors to provide oversight of the organization's activities"
The Sarbanes/Oxley Act of 2002 was passed by Congress in response to massive accounting scandals.
Significant provisions include: Establishes the Public Companies Accounting Oversight Board (PCAOB) with broad authority, including the power to set auditing standards for audits of publicly traded companies Requires the CEO and CFO certify the financial statements Requires companies to provide a comprehensive report on internal controls over financial reporting and that auditors report on internal controls Audit Committees given expanded powers as the 'audit client' and must pre-approve any non-audit services by its external auditors Audit Committees must report their activities to the public