The Auditor's Responsibilities Regarding Fraud and Mechanisms to Adress Fraud: Regulation and Corporate Governance

4 important questions on The Auditor's Responsibilities Regarding Fraud and Mechanisms to Adress Fraud: Regulation and Corporate Governance

Fraudulent financial reporting

The intentional manipulation of reported financial results is called fraudulent financial reporting. Three common means to accomplish fraudulent financial reporting include manipulation, falsification, or alteration of accounting records or supporting documents, misrepresentation or omission of events, transactions or other significant information and/or intentional misapplication of accounting principles.

In which areas did Enron had problems and failures?

- Management accountability
- Corporate Governance
- Accounting Rules
- The Financial Analyst Community
- Banking and Investment Banking
- The External Auditing Profession and Arthur Andersen

Sarbanes-Oxley Act of 2000

- It removes self-regulation of the auditing profession and replaces it with independent oversight by the PCAOB.
- It prevents audit firms from providing many consulting services to audit clients
- It significantly expand the power, responsibilities and disclosures of corporate audit committees, thereby adressing concerns over weak corporate governance. Audit committees are directly responsible for the oversight of the company's external auditors and have the power to hire and fire the auditors
- It requires management assessment and external audit firm attestation regarding the effectiveness of itnernal control over financial reporting
  • Higher grades + faster learning
  • Never study anything twice
  • 100% sure, 100% understanding
Discover Study Smart

Corporate governance mosaic

This refers to the fact that each of these parties has complementary roles and specific responsibilities; no one party is completely responsible.

The question on the page originate from the summary of the following study material:

  • A unique study and practice tool
  • Never study anything twice again
  • Get the grades you hope for
  • 100% sure, 100% understanding
Remember faster, study better. Scientifically proven.
Trustpilot Logo