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 Two recent significant events have had a dramatic impact on corporate governance and the responsibilities of both Companies and their independent auditors. These were the passage of the Sarbanes-Oxley Act of 2002 (SOX) and the issuance of Statement on Auditing Standards on the Consideration of Fraud in the Financial Statement Audit (SAS 99) by the American Institute of Certified Public Accountants. Together these documents have changed the landscape of professional services provided by Independent Auditors and their relationships with corporate clients.
While the provisions of the SOX legislation principally apply to publicly traded companies and governmentally regulated industries, various states have enacted similar provisions directed at privately owned businesses. SAS 99 requirements, which complement SOX provisions, apply to all companies.
Effective for years beginning after December 15, 2006 the risk related auditing standards effecting both public and private sector enterprises has been expanded as a result of a new suite of risk assessment auditing standards SAS 104-111. These Statements require prompt attention from both Directors and Management.
Companies such as Enron and WorldCom have shown us that officers and directors of companies can be held civilly and criminally responsible for financial fraud which occurs under their watch. As a result, directors and executives are asking questions; “How can we protect ourselves and our companies? Do we have the proper controls and safeguards in place to prevent financial fraud?” In order to answer these questions, audit firms are now offering a service called “Risk Assessment Study”. |
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