The Public Company Accounting Oversight Board (PCAOB) is a nonprofit organization that regulates auditors of publicly traded companies. PCAOB was organized as a result of the making of the Sarbanes-Oxley Act of 2002. PCAOB purpose is to ensure that the auditor is following a set of strict guidelines on the protection for investors and other stakeholders of public companies. PCAOB vision is to be a "model regulatory organization" that strives for new ideals without maximizing the cost. PCAOB is…
WorldCom-type accounting scandals. The most important part of this Act is that it provides a new nonprofit company responsible for the inspection and sanction of audit firms; this is "the Public Company Accounting Oversight Board”. SOX led to a greater internal control of financial information, and an increase of independence among the boards, committees, and directors. Also, new requirements were imposed such as reports and audits. “The old ways weren’t working. That idea lit the corporate…
automated system carries with it some confidential data and information, which may be compromised if proper protection measures are not adhered to. These threats and risks are associated with both internal and external forces. However, in most instances this threats and risks have been greatly been linked with internal sources and mainly due to human doings rather than natural forces. A small mistake such as bad or accidental entry made by the employees may be attributed to causing enormous…
the egregious and fraudulent activities. The effects of these companies’ mismanagement has been so troubling that congress passed legislation in 2002, called the Sarbanes-Oxley Act of 2002 (SOX); which requires public companies to have established internal controls and to have them published with the Securities Exchange Commission (SEC) (pg.132 Edmonds). This act is only a requirement for US publicly traded companies. However, private companies should…
Financial Statement Fraud The auditor will focus on the red alerts that have been cited to point out to the probability that there is a case of fraud in the organization. The auditor will, through the memo, make it clear to the employees that indications of fraud and the steps that will be taken in relation to citing the scam in the instances it occurred. The red flags will be clearly cited in the memo. Through the red flags, the employees will comprehend the shortcomings associated with the…
Internal controls can foster errors throughout operational practices, which can often remain uncorrected. The concepts of fraud, internal control and risk management are not uncommon across the commercial banking sector and strategies have been devised to respond effectively to areas which are at risk in terms of microfinance organisational scope down to the project and program level scope. While most internal errors are representative of a minor loss of…
controls include background checks, references and evidence of qualification. Supervisory controls include training and oversight of employees and the drawing up of monthly management reports. Although internal controls help to achieve reliable financial reporting, they do not always guarantee this. Internal control systems can fail in circumstances relating to fraud, corruption or business failure. The causes of breakdown resulting from human factors and computer systems may include: Failure…
of if said cost reductions are a material weakness or a significant deficiency in the organization’s internal control. PPC Cost Reductions As a result of the recent recession PPC’s revenues have shrunk $125 million. Such reductions in revenues have caused the organization to become minimally profitable. Moreover, the organization…
Following the preliminary engagement activities, the audit team should go about setting an audit strategy and have an audit plan developed. The strategy will go over aspects of how the audit procedure and discuss the scope, timing, and direction of the audit itself. This well help determine resources that the audit team will need in order to carry out the audit including experience of auditors, and the industry specific skills that may be necessary. Amount of resources should also be taken into…
Introduction This document will discuss the purpose of the internal control system. The purpose of the internal controls system is to safe guard assets, ensure integrity of financial information, and to protect customer’s information. While auditing the ABC Company’s financial record I found an error which reflects the strength of their internal control system. So I’ve been asked to educate my fellow accountants on the limitations of the internal control system in preparation for an upcoming…