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426 Index

Preaudit planning, 200 fraud risk factors, 202“203, 330
Private Securities Litigation Reform Act of SAS No. 47, “Audit Risk and Materiality in
1995, 150, 399 Conducting an Audit,” 187, 202
Professional accounting associations, 413“416 Roberts, Judith L., 350
Proxy statements, 395“397, 399 Roehm, Harper A., 30, 261
Public accounting firms Role of audit committee, 29, 30
compensation, 78 accounting policy disclosures, 291“296
reporting to audit committee, 78 audit planning. See Audit planning
Public Company Accounting Oversight Board corporate contributions, 364
(PCAOB), 3, 137, 239, 399 expanding role, 44
Public Company Oversight Board, 416 financial reporting
Public Oversight Board (POB), 137, 399 and credit grantors, 113“120
accounting policy recommendations, 292, 293 and investors, 105“112
corporate governance approach for auditing, oversight of, 293“296
196 financial statements, 294
detection of management fraud and reporting foreign payments, 353“357
illegal acts, 333“335 fraud risk assessment, 339“344
internal control reporting recommendations, importance of, 42
247 and independent auditors, 83, 84
Panel on Audit Effectiveness (O™Malley internal controls, 242“247
Panel), 10 perquisites, 361, 362
report and recommendations, 20, 21 report to board of directors, 390, 391
Public trust. See Credibility responsibilities of, 44, 45
Sarbanes-Oxley provisions, summary of, 36,
Quality control, 109, 110 86, 231
Questionable foreign payments. See Foreign Rubin, Steven, 99
Corrupt Practices Act Russell Reynolds Associates, 416

Regulation S-K, 123, 360, 361 Sarbanes-Oxley Act of 2002, 3, 220, 349
Regulatory agencies advisors and experts, use of, 143
accounting information, need for, 121 attorneys, minimum standards of conduct,
importance of, 120 169
SEC. See Securities and Exchange audit committee, 398
Commission (SEC) defined, 43
as users of accounting information liability, 400, 401
importance of, 120 summary of responsibilities, 36, 86, 231
need for accounting information, 121“128 audit partner rotation, 63, 109
Regulatory reform, 3, 55, 402 audit planning, 230, 231
Reporting standards, 182“189 auditors™ reports to audit committees, 63, 64
Reports code of ethics for senior financial officers, 65,
audit committee report. See Audit committee 66
report conflicts of interest, 64, 69, 70
auditors™ or accountants™ report. See Auditors™ and corporate credibility, 8, 9
report director liability, 9
future trends, 399“403 insurance, 143
management report, 80, 81, 238 disclosure
Ridley, Anthony J., 275 of period reports, 72, 76
Risk real time issuers, 77
AICPA Control Risk Audit Guide Revision transactions involving management and
Task Force, 200, 201 principal stockholders, 64, 65
audit planning. See Audit planning employees of publicly traded companies who
audit risk. See Audit risk provide evidence of fraud, protection for,
financial reporting misstatements, risk factors 67, 68
relating to, 204“206 financial expert provisions, 57, 58
fraud risk assessment, 339“344 financial reports, 70“75
Index 427

financial statement restatements, 137 Shandor, John, 6
improper influence on conducts of audits, 68, Shareholders. See also Investors
69 impact on corporate policies, 100, 101
independent auditors, reporting to audit institutional investors, 100
committee, 294, 306“309 as investors, 99
internal auditing, 252 profiles, 101
and internal control, 65, 235, 239 voting power, 101
management Shatto, Gloria M., 363
fraud, 322 Shering-Plough, 364
internal controls, 65 Sherwin, David, 325
preapproval of audit and non-audit services, Spangler, William D., 56
62, 63 Special Committee on Assurance Services
selection and appointment of auditors, 228 (Elliott Committee), 131, 135“136, 401
services outside scope of practice of auditors, Special Committee on Financial Reporting
61, 62 (Jenkins Committee), 130“135
standards relating to audit committees, 48, 54 Stakeholder groups
Sawyer, L.B., 326, 337 accountability of board of directors, 6
Schornack, John J., 293 accounting information, need for, 129
Schwartz, R. A., 362 AICPA position, 130, 131
Securities Act of 1933, 146“148 audit committee, role of, 129, 130
Securities and Exchange Commission (SEC), importance of, 128, 129
220, 416 stakeholders defined, 100
accounting information, need for, 121 as users of accounting information, 129, 130
audit committee rules and standards, 17“19 Standards for Attestation Engagements. See
corporate perquisites, 358“361 Statements on Standards for Attestation
corporate reports, 121, 122 Engagements (SSAEs)
enforcement actions, 103 Standards for the Professional Practice of
executive compensation disclosure, 127 Internal Accounting, 275, 276, 321
financial fraud and disclosure cases, 344“346 Stanga, Keith G., 112
Financial Reporting Release No. 36, 123, 124 State law, 144“146
Form 8-K, 121, 122, 126 Statements for Performing and Reporting on
Form 10-K, 121, 122, 126, 128 Quality Reviews, 189
Form 10-Q, 121, 122 Statements of Financial Accounting Concepts
fraud rules, 77 (SFAC), 97“99, 184
independent auditors, reporting to audit comparability and consistency of information,
committee, 294, 306“309 185
internal control reporting requirements, 240, disclosures, 186
241, 374 financial reporting statements, 97, 98
listing standard requirements. See Listing materiality, 186, 187
standards objectives of financial reporting, 104
Management™s Discussion and Analysis Statements of Financial Accounting Standards
(MD&A), 123“126 (SFAS)
nine-point action plan, 11“13 SFAS No. 95, cash flows, 114, 115
purpose of laws, 121 SFAS No. 105, financial instruments,
Regulation S-K, 123 114“120
releases relating to audit committees, 37 SFAS No. 107, fair value disclosure, 114“120
reports and statements required by, 121, 122 SFAS No. 133, derivative instruments and
audit committee role, 128 hedging activities, 114, 116“120
unethical financial reporting, summary of Statements of Position (SOPs)
cases and violations, 166“168 summary of, 411“412
Securities Exchange Act of 1934, 48, 54, 148“150 Statements on Auditing Standards (SAS)
Self-regulatory organizations (SROs), 220, 401. SAS No. 47, “Audit Risk and Materiality in
See also New York Stock Exchange Conducting an Audit,” 187, 202
(NYSE) SAS No. 50, Reports on the Application of
listing standards. See Listing standards Accounting Principles, 126
428 Index

Statements on Auditing Standards (SAS) (cont.) Studies
SAS No. 56, “Analytical Procedures,” 203 audit committees, summaries of research, 34,
SAS No. 59, ability to continue as going 35
concern, 124
SAS No. 60, “Communication of Internal Task Force on Corporate Responsibility,
Control Related Matters Noted in an 169“172
Audit,” 243, 244 Taylor, John C., 355
SAS No. 61, scope and results of audit, “The Numbers Game,” 10“13
information provided to audit Tiessen, P., 260
committee, 202 Treadway Commission, 30, 220, 399, 401. See
SAS No. 65, “The Auditor™s Consideration of also Committee of Sponsoring
the Internal Audit Function in an Audit Organizations (COSO)
of Financial Statements,” 279“281 Triton Energy Corporation, 350“352
SAS No. 79, “Consideration of Fraud in a Turley, James S., 3
Financial Statement Audit,” 202
SAS No. 82, fraud standard, 329 U.S. Surgical Corporation, 156
SAS No. 99, fraud in financial statement
audit, 320, 321, 329“331 Verschoor, Curtis C., 250
SAS No. 100, “Interim Financial Vicknair, David, 55
Information,” 382 Vondra, Albert A., 30
statement numbers, summary of references,
406“410 Wal-Mart Stores, Inc.
summary of, 190“192 accounting policies, 295, 297, 299“305
Statements on Quality Control Standards, 109, audit committee
189 charter, 49“54, 289
Statements on Responsibilities in Tax Practices, composition and size of, 57
189 delegation of responsibility and authority
Statements on Standards for Accountants™ to, 46“48
Services on Perspective Financial report, 396, 397
Information, 189 role in financial statement and disclosure
Statements on Standards for Accounting and matters, 110“112
Review Services, 189 selection and appointment of independent
Statements on Standards for Attestation auditors, 228
Engagements (SSAEs), 189, 192“193 audit planning, 221, 222
SSAE No. 2, “Reporting on an Entity™s auditor™s report, example, 83
Internal Control Structure over Financial critical accounting policies, example,
Reporting,” 237“239, 375 124“126
SSAE No. 3, “Compliance Attestation,” 237, internal control, statements on, 245, 246
238, 240 Report of Management, example, 81
SSAE No. 8, Management™s Discussion and Walker, John P., 261
Analysis, 135 Welch, James, 109
SSAE No. 10, 375 Williams, Harold M., 29, 398
statement numbers, summary of references, WorldCom, 3, 137, 402
406“410 Wright, Arnie, 110
summary of, 193
Statements on Standards for Management Zetzman, Wayne, 45
Consulting Services, 189

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