Auditing Ritter 审计学基于的环境变化的概念ch02.pptVIP

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 organizations activities 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 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 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 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 g