Fraud Audit Standards

New Fraud Audit Standards.

Speaking about fraud I would like to say that it is rather popular in the USA especially in the large multibillion dollar corporations that probably become too greedy to report all their earnings to the IRS or who try to overstate their statements to attract even more cash from the investors at cheaper prices. In this essay I would like to speak about the statement on Auditing Standards No. 99, Consideration of Fraud in a Financial Statement Audit. I would like to note that this statement stresses the role of the professional skepticism at work place and the use of pop-up tests to check the statements accuracy and reliability.

The statement states that the first and the best way to prevent fraud from happening is to establish strict internal corporate controls and public awareness of fraud as being something evil that needs to be reported and not encouraged.  Reporting fraud is considered the second line of defense in the corporate world. The role of an internal  auditor is re-emphasized heavily. Now the auditor is not supposed to be a person who only reads data from the corporate financial statement but now they must be people who are good psychologists and possess exceptional interviewing skills.

The corporate management is also encouraged to learn about the possible fraudulent issues and “to explore the origin of and circumstances surrounding fraud so that its frequency and effects can be minimized”. In other words the corporate management learns about the ways that fraud can permeate the organization and should do its best to prevent the fraudulent behavior from happening.

At the same time the college and university accounting books authors are encouraged to write freely about the fraud, accounting schemes and the legal penalties that will be posed on those who violate the laws.

 

Bibliography:

http://www.aicpa.org/pubs/cpaltr/nov2002/fraud.htm

 

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Posted in Accounting, Article Review and tagged accounting, business analysis, Fraud Audit Standards.