most profound financial crisis since the Great Depression. The origin of the recession varies by which economist is asked. Some economist contribute the recession to the rise in oil prices and the weak dollar. The common theory to the 2007-08 financial crisis is the collapse of the housing market bubble and the related subprime mortgage crisis. Consequently, the results of these two problems contributed to the decline of both consumer and corporate credit. During this period, financial…
The Sarbanes Oxley Act of 2002 which was also called SOX was published by the Congress in 2002 to protect investors’ interest (SOX, 2002). After the enactment of SOX, corporate financial reporting was more strict and normative. However, there were a lot of accounting scandals before 2002. And the Enron scandal attracted the most public attention of all the scandals. Enron was created in 1985 and was one of the largest energy companies around the world. However, in 2001 and 2002 the company was…
primary objectives: • External Audit: The external auditors are not the employees of the organisation. They report directly to the Shareholders of the organisation. They main duty is to tests the underlying transactions that form the basis of financial statements. They form an opinion as to whether or not these statements reflect a true view. Reliance may be placed on the systems that produce the accounts that make up the statements thus reducing testing required if the system is found to be…
It is often argued that this practice impairs an accountant/auditor’s independence. For this reason, the Sarbanes-Oxley Act of 2002 imposed a one year cooling-off period before publicly held companies may hire former auditors as employees of key positions. (Wright & Booker, 2005) The purpose of the cooling off period is to ensure the former auditor can maintain his or her independence. Public companies try to hire their former auditors in hopes of increasing investors’ confidence…
worldwide. They also apply their expertise and talents to help educational institutions, the federal government, non-profits and international ease agencies address their unique business issues. The purpose to produce financial statements is to provide information about their financial position and performance. This information is used by a wide range of stakeholders for making economic decisions. The owners of these…
includes lots of activities and it is not part of regulatory guidance. Forensic auditing are the wide range of activities for investigation purpose, which are performed by accountant in practice. The work of the forensic auditor is to investigate the financial affairs of the organization and most importantly includes investigation of any fraudulent activity. Internal auditor can use a third party forensic auditor for this purpose and than report the findings to the Board and audit committee.…
From the case it is clearly reflected that Hi-Sail Company's balance sheet was not as per the standard. The president and the chief financial officer along with client showed some sense of urgency to get the incorrect audit fieldwork (Draft of balance sheet) from the auditor without last year’s potential tax liabilities, debt related to join ventures information etc. During audit information was not correctly provided to the auditor. To handle this situation the first action…
Sarbanes-Oxley Act of 2002 (SOX). This had come not long after investors and companies lost billions of dollars due to the result of such corruption, thus having a negative impact on financial markets and investor trust. The enactment of SOX set forth new standards and provisions which sought to improve the accuracy of financial reporting by companies and help protect shareholders and the general public from possible accounting errors or fraudulent activities committed by corporations. Overall,…
directors with clear measures regarding the size of the committee, the frequency of meetings, the financial expertise of its members, etc. This decision had positive impact on the banks’ corporate governance in many terms. It helped improving the internal audit work especially in the Anti Money Laundering function. The new decision also made the audit committee able to evaluate the external auditors’ independence. However, these requirements are still lacking important protection codes (Salloum,…
Those provisions would have deterred the actions of Scott Sullivan, CFO at WorldCom because they notify upper management about the significance of the financial reporting process. Sullivan capitalized the network lease, which was wrong. According to ASC 840, the network lease must be treated as the operating lease. In reaction to this mistaken action, Cynthia evaluated a fraud risk depending on AUC 240…