Section 404 of Sarbanes-Oxley Act Introduction Before 2002, many U.S. companies, such as Enron, WorldCom and Xerox went bankrupt and caused the serious global issues and financial responsibilities of managers in the world. The primary issue was about an ethical leadership and maintained the clean audit system. Well known examples perhaps were Enron and WorldCom scandals. Dyck and Neubert (2010) mentioned that “Ironically, the lucrative rewards for performance and innovation were keys to Enron’s
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restated as of January 23, 2011) Purpose The Committee is responsible for assisting the Board of Directors in its oversight responsibilities relating to (i) the integrity of the Company’s financial statements and financial reporting process; (ii) internal and external auditing, including the qualifications and independence of the independent registered public accounting firm and the performance of the Company’s internal audit services function; (iii) the integrity of the Company’s systems of internal
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year longer to fully comply (Gunter, 2004). The primary purpose of the act was to combat the ever increasing counts of corporate fraud, mainly by making management responsible for the actions of their organization. This goal also reached out to the auditing firms, by the development of the Public Company Accounting
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Question 1 Who is permitted to act as the auditor of company under the Companies Act 1965? Under section 9(1) of the Act, a person is prohibited from acting or accepting an appointment as the auditor of a company if he is: Not an approved company auditor => Section 4 ( Definition ) and section 8 - Company auditors and liquidators to be approved by Minister charged with responsibility for finance . Indebted to the company or its related company in an amount exceeding RM 2,500. An officer of the company
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Case Study: Enron Corporation and Andersen LLP Enron was one of the biggest companies, in the industry of electricity, natural gas, and paper manufacturing. The Company's revenues in 2000 were 111 billion, which made Fortune magazine Comrade crowned her the most innovative in the United States for six consecutive years. At the end of 2001, the company declared bankruptcy with approximately -65.5 billion dollar in debt and the company’s share price fell within a few weeks from a high of nearly ninety
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confirmation process at all times. The auditing team relied on Satyam management to send confirmation requests for accounts receivable for 2006 and 2007 audits. b) Second requests and, where warranted, third requests should be mailed when responses to positive confirmation requests have not been received within a reasonable time. If the client requests exemption from confirmation for any accounts selected by the auditor, obtain and document satisfactory explanations. The auditing team never
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culturally. As the world has evolved, so has business, and as business has evolved so has auditing. The concept of auditing is as old as civilization. The need for a knowledgeable, external, third person to verify transactions or accounts and detect fraud has been present since the advent of trade and accounting. Thus the goal of auditing, in this sense, has not changed since. Teck-Heang Lee observed that “auditing serves as a mechanism to monitor conduct and performance, and to secure and enforce accountability
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CHAPTER 1 AN INTRODUCTION TO ASSURANCE AND FINANCIAL STATEMENT AUDITING Answers to Review Questions 1-1 The study of auditing is more conceptual in nature compared to other accounting courses. Rather than focusing on learning the rules, techniques, and computations required to prepare financial statements, auditing emphasizes learning a framework of analytical and logical skills to evaluate the relevance and reliability of the systems and processes responsible for financial
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generally accepted auditing standards (GAAS). Auditing standards provide a measure of audit quality and the objectives to be achieved in an audit. Auditing procedures differ from auditing standards. Auditing procedures are acts that the auditor performs during the course of an audit to comply with auditing standards. Auditing Standards 2. The general, field work, and reporting standards (the 10 standards) approved and adopted by the membership of the AICPA, as amended by the AICPA Auditing Standards Board
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is primarily concerned with methods for recording transactions, keeping financial records, performing internal audits, reporting and analysing financial information to the management, and advising on taxation matters. In short, it is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a given period, and the value and nature of a firm's assets, liabilities and owners' equity
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