Usefulness of having audit committee. The first one is audit committee can improve the auditor’s independence. Audit committee is the body responsible for overseeing the company’s relations with the external auditor. Therefore, audit committee help in ensuring that there is no conflicts of interest exist that might interfere with the auditor's ability to issue its opinion on the financial statements. Thus, they may help in improving the independence of external auditor. Next, audit committee can improve
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ANALYSIS Established in 1998 by Chris Richard, Gemma Wood and Lauren Hulme, Richard, Wood and Hulme LLP (“RWH”) is a financial services firm offering audit and taxation services to its clients with a mission of delivering excellent service and improving clients’ internal controls. Being a “team player” is an essential trait of a RHW employee because client audits are completed by teams. The client fee is flat, so the more efficiently and effectively the team members’ work, the higher the margins the firm
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Case #3.4 – Sunbeam – Incentives and Pressure to Commit Fraud I. Technical Audit Guidance To maximize the knowledge acquired by students, this book has been designed to be read in conjunction with the post-Sarbanes-Oxley technical audit guidance. All of the post-Sarbanes-Oxley technical guidance is available for free at http://www.pcaobus.org/Standards/index.aspx. In addition, a summary of the Sarbanes-Oxley Act of 2002 is also available for free at http://thecaq.aicpa.org/Resources/Sarbanes+Oxley/Sarbanes-Oxley+–+The+Basics
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Introduction to Accountant Responsibility Essentially, accountants have a responsibility a number of parties, with the major parties in this case being the government, clients and third parties. In today’s capitalist society, the accounting profession is deemed to be a common and important feature. Discussing the responsibilities accountants have to the three parties identified above would, therefore, certainly be a prudent and logical move. Responsibility to Clients To begin with, accountants
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under a misleading firm name. 11. A member shall not knowingly subordinate his or her judgment to others. 12. A member shall follow the technical standards of the Auditing Standards Board in an audit engagement. 13. A member bases the fee on the findings determined by the IRS in a tax audit case. 14. A member discloses confidential information in a peer review of the firm’s practice. 15. A member issues an unqualified opinion when a client departs from GAAP because of a conceptual
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company that provides air cargo carrying services within the Asian region. The company owns five fully owned subsidiaries and the major shareholders of this company is Bangor Berhad. The company’s external auditor is Kencana & Associates where the audit team is led by Mr Chuah Mun Soong. On 5th February 2006, Mr Chuah has been informed by his team that there are some inconsistencies in the accounts of FCB. Therefore he has decided to do his own investigation on the company to determine is there any
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company awarded with several engineering projects and its cumulative revenue for 2004 is RM1 million and RM1.7 million for 2005. The company is family based company and most of them only have secondary school background. They do not familiar with the audit. They also did not familiar with Accounting Standards and the provision of the Companies Act. The company also consists from the non experiences staff of their job. In May 2006, the company had employed Cik Amy graduated from a local university with
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Ghost Employees As long as a company has a payroll office, the risk of having a ghost employee exists. A ghost employee refers to someone, either real or fictitious, who is on the company’s payroll but does not actually work for the company. A ghost employee is most frequently a recently departed employee, a made-up person, or a friend or relative of the fraudster who created the employee. There are a few steps that are taken in order for the ghost employee to be successfully added. First, the
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1. It would not be appropriate for Avis to substitute the sample. Once the fraud is discovered an auditor has the obligation to report it to management and the board of directors, even if the amount in consideration is immaterial to the financial statements. Had she not reported it, the managers would not have been caught. 2. Avis affected because it is her moral and ethical obligation to report the fraud at the risk of being a whistleblower. The managers are definitely affected as it is their job
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AUDIT RISK MODEL Audit Risk (AR): risk that auditor will opine (render an opinion) with an unqualified opinion when unknown to auditor, FS are materially misstated (ultimate risk) Inherent Risk (IR): risk that errors (or misstatements or deviations) will occur," clientcontrolled Control Risk (CR): risk that client's internal control system will fail to prevent/ detect/correct errors ... clientcontrolled Detection Risk (DRI_ risk that auditor's procedures will fail to detect
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