UNCOVERING CORPORATE IRREGULARITIES - ARE WE CLOSING THE EXPECTATION GAP

A RECENT SURVEY SHOWS A WIDE GAP BETWEEN WHAT AUDITORS BELIEVE THEIR DUTY IS TOWARD UNCOVERING FRAUD AND IRREGULARITIES AND WHAT USERS OF FINANCIAL-STATEMENTS, SUCH AS FINANCIAL ANALYSTS, BELIEVE IT TO BE. AUDITORS FEEL THAT THE AUDIT FUNCTION SHOULD NOT BE RELIED UPON TO UNCOVER FRAUD, WHEREAS USER...

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Bibliographic Details
Published in:Journal of accountancy 1977-10, Vol.144 (4), p.56
Main Authors: Baron, C David, Johnson, Douglas, ET AL
Format: Magazinearticle
Language:English
Subjects:
Auditors
Disclosure
Fraud
Polls & surveys
Responsibilities
Online Access:Get full text
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Summary:A RECENT SURVEY SHOWS A WIDE GAP BETWEEN WHAT AUDITORS BELIEVE THEIR DUTY IS TOWARD UNCOVERING FRAUD AND IRREGULARITIES AND WHAT USERS OF FINANCIAL-STATEMENTS, SUCH AS FINANCIAL ANALYSTS, BELIEVE IT TO BE. AUDITORS FEEL THAT THE AUDIT FUNCTION SHOULD NOT BE RELIED UPON TO UNCOVER FRAUD, WHEREAS USERS BELIEVE THE OPPOSITE. THE AICPA HAS RECENTLY PASSED STANDARDS 16 AND 17 CLARIFYING THE AUDITOR'S EXPANDED ROLE IN DETECTING AND DISCLOSING IRREGULARITIES SO THAT IT MORE CLOSELY CONFORMS TO THE EXPECTATIONS OF USERS. ALSO, THE AICPA HAS ISSUED REPORTS RECOMMENDING MEASURES TO CLOSE THE GAP EVEN FURTHER. SAS 16 STATES MORE STRINGENTLY WHAT THE AUDITOR'S RESPONSIBILITIES IN DETECTING IRREGULARITIES ARE THAN SAS 17. THE AUDITOR IS CHARGED WITH A SUBSTANTIAL RESPONSIBILITY FOR DISCOVERING MATERIAL ILLEGAL TRANSACTIONS UNDER 16, YET ONLY A MINOR RESPONSIBILITY FOR DETECTING IMMATERIAL ILLEGAL ACTS UNDER 17. TABLES.
ISSN:0021-8448
1945-0729