Suchergebnisse

• eBook-Kapitel aus dem Buch Accounting Fraud

  A Practice Aid for Auditors: Fraud Interviews – An Inquiry Guide

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …. These cases were well beyond the scope of a traditional audit. Nevertheless, auditors have to be more aggressive in order to detect fraud. They have to… …plan and perform every audit with an increased focus on professional scepticism in gathering and evaluat- ing audit evidence. All members of the audit… …team have to be motivated to think about how and where fraud might occur. They have to conduct the audit with a mindset that recognizes the possibility… …that fraud could be present, regardless of any past experience with the audit client and regardless of the belief about manage- ment’s honesty and… …practice aid designed to help the audit team to plan and tailor these fraud interviews as required by the international auditing standards. It in- cludes… …– As you are probably aware, CPAs today are required to assess the risk of fraud in the audit of every company, not just yours. Therefore, we need to… …report to? – Has management reported to the audit committee on the process for identify- ing and responding to the risk of fraud? Has management reported… …the Audit Committee – How does the audit committee communicate with management its views about business practices and ethical behaviour? How would… …such instances to the board? If so, what was the response? – Does the audit committee have knowledge of any actual fraud or suspected fraud… …, analysts, regulators, suppliers or others? Appendix: Practice Aids 300 – Do employees have a direct channel to the audit committee? Are such chan-…

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  Fraud Theories

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …be a weak audit committee or weak internal controls, and the atti- tude/rationalization might be that “we’ll only cook the books until we get over this…
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  Case 40: Kanebo (Japan, 2005)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …misstatements in mind, the public began to doubt whether the auditors remained independent from their client in the Kanebo audit. Chuo Aoyama, Japan’s… …second-largest accountancy firm with more than 1,300 CPAs, had served as Kanebo’s audit firm for decades. The engagement partners had worked on the annual audits… …Fraud in Asian Companies 237 demand had been made to have Kanebo’s statements corrected, resulting in an audit approval. According to the… …(FSA) to suspend its operations for the two-month period July 1–August 31, 2006. In im- posing the penalty, the FSA said the audit firm’s failure to… …to ensure audit quality control was deemed insufficient by the agency. The penalty was the FSA’s first against one of Japan’s “Big Four” audit firms… …independent audit firm at all times. The suspension of Chuo Aoyama meant that the firm’s approxi- mately 800 audit clients that had listed securities on a… …lost nearly one-third of its audit clients, including more than 200 publicly listed clients and high-profile companies such as Sony Corp., Shiseido… …. Accounting Fraud in Asian Companies 238 As well as causing an exodus of audit clients, the punishment of Chuo Aoyama also helped to fuel extreme… …establish a new independent affiliated firm in Japan that would “adopt international best practices in auditing”. Thus, in July 2006, a new audit firm… …the taint – changed its name to “Misuzu Audit Corporation” and under- went a review to strengthen its quality control functions. But already in February…

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  Case 7: Waste Management (1997)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …client too hard. Accounting Fraud in U.S. Companies 56 For example, in its 1993 audit, Andersen quantified misstatements of USD 128 mil- lion… …material and that Andersen could issue an unqualified audit opinion on the com- pany’s 1993 financial statements. In 1994, WMI continued to engage in the ac-… …counting practices that had given rise to the quantified misstatements. As in 1993, Andersen’s managing partner and the head of the audit division were… …list of clients that posed a significant risk to the audit firm. After the 1995 audit, Andersen prepared a memorandum articulating its disagree- ment… …presentation and effect on current year earnings.” But despite its concerns about WMI’s use of netting, Andersen did not withdraw its 1995 audit report or… …, Allgyer coordinated the marketing efforts of Andersen’s entire Chicago office, including cross-selling non-attest services to audit clients. –… …Shortly after Allgyer’s appointment as engagement partner, WMI capped Andersen’s audit fees at the prior year’s level, but allowed the firm to earn… …additional fees for “special work”. – Between 1991 and 1997, Andersen billed WMI approximately USD 7.5 mil- lion in audit fees. Over this seven-year period… …, the billings to WMI for audit and non-audit ser- vices.) However, the review was virtually ignored by WMI; a board member who had approved the review… …ordered the destruction of damaging evidence, misled the company’s audit committee and internal audit, and withheld certain in- formation from the outside…

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  Case 32: Comroad (Germany, 2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …at all to query. On the contrary: in the years 1996, 1997, 1998, 1999 and 2000, Comroad has al- ways received an unqualified audit certificate. So we… …spokesperson, KPMG stated that “there were justified doubts about the trustworthiness of Comroad”. The audit firm gave two reasons for resigning… …American-style revolts at their annual meetings to block the rehiring of KPMG. The audit firm suffered an increase in the number of clients that switched away to… …another auditor: KPMG’s share of the German audit market dipped from 22% in 2001 to 18% in 2002, the year that the Comroad scandal unfolded. “Trust in… …account- ing firm Roedl & Partner has presented a comprehensive final report on the special audit of Comroad AG for the years 1998–2000. The report confirms… …growth in Germany, a hugely important market for the audit firm. Another question posed by the scandal concerns the role of the banks. Comroad…

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  Case 13: WorldCom (2002)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …employee, Cynthia Cooper. She was part of an internal audit team checking the books on behalf of the newly appointed CEO, John Sidgmore, who had taken over… …that it was not her problem. When she continued to raise her concerns, she was told by WorldCom’s CFO, Scott Sullivan (to whom internal audit reported)… …, Sullivan asked Cooper to delay her audit, but she refused. The next day she told the head of the audit commit- tee about her findings. The committee, once… …advised of the issue, took it seriously and directed prompt attention to it. On June 20, Cooper attended an audit committee meeting at which Sullivan was… …the largest client of Andersen’s Jackson, Mis- sissippi, office. From 1999 through 2001, WorldCom paid Andersen USD 7.8 mil- lion in fees to audit the… …raise the appropriate questions. However, there were apparent flaws in Andersen’s audit approach, limiting the likelihood it would detect the accounting… …irregularities (see Beresford/Katzenbach/Rogers 2003, pp. 230–241): – Following the risk-based audit model, Andersen limited its testing of account balances… …part, knowing it was receiving less than full cooperation, failed to bring this to the attention of WorldCom’s audit committee. – Andersen’s audit… …normally speak to understand a client’s business. Above all, it limited its contact with internal audit. Andersen did not work with internal audit to… …improve internal controls or resolve other problems that internal audit encountered and documented. There is no evidence that Andersen knew…

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  Case 10: MicroStrategy (2000)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …governance and compliance. These changes included creating an internal audit department, appointing an inde- pendent director with experience in public… …software products for resale to audit and consulting clients. Possibly, they covered up the relationship by using a third party as a go-between. However… …, in August 2003, the SEC ended its investigation of PwC with no enforcement action against the audit firm. Accounting Fraud in U.S… …. Companies 74 Nevertheless, the SEC did take action against the former PwC lead audit partner at MicroStrategy, Warren Martin. The SEC alleged that… …pay USD 51 million to settle a suit brought by shareholders who alleged that the audit firm defrauded them when it approved MicroStrategy’s financial…

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  The Warning Signs of Fraud

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …(monitoring of management, internal control components) – Ineffective board of directors or audit committee oversight over the financial reporting process… …or small group without compensating controls – Ineffective internal audit department – Management and internal auditors exhibiting a… …turnover rates of accounting, internal audit, compliance, or IT staff – No clear separation of duties – Inadequate system of authorization and approval of… …attention to details – No signs of personal ethics; undisclosed conflicts of interest – Using several different audit firms over time; frequent changes in… …Undue demands on the auditor, such as unreasonable time constraints regard- ing the completion of the audit or the issuance of the auditor’s report –… …to people or information or the ability to communicate effectively with the board of directors or audit committee – Domineering management behaviour… …the audit engagement – Management lying to the auditor or being overly evasive in response to audit inquiries; reluctance to provide auditor with… …difficult-to-audit transactions; one or a few specific transactions that have a material effect on the financial statements – New client with no prior audit history… …: Consideration of Fraud in a Financial Statement Audit, October 2002 AICPA: Management Override of Internal Controls: The Achilles’ Heel of Fraud Prevention… …Consider Fraud in an Audit of Financial Statements, February 2004 Krambia-Kapardis, Maria: Enhancing the Auditor’s Fraud Detection Ability –…

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  Case 1: McKesson & Robbins (1938)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …conducting audit tests. Finally, the auditing profession adopted two standards that are still followed today (see WSJ June 30, 1999): – The physical… …independently confirmed by contacting a sample of the parties who allegedly owe the money. When accepting the audit of McKesson & Robbins in 1925, the… …reforms that helped, rather than hurt, the profession. The changes in audit procedures that followed the fraud improved audit quality. Perhaps…

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  Case 44: Satyam Computer Services (India, 2009)

  Prof. Dr. Klaus Henselmann, Dr. Stefan Hofmann

  …Beresford, a former chairman of the FASB, the U.S. accounting watchdog. “If you are an audit- ing company and your client says they have USD 1 billion in… …“appropriate audit evidence”. PwC alleg- edly was unaware of Satyam’s inflated financial figures until Ramalinga Raju re- vealed them. Nevertheless, there were… …reports was retrieved from the e-mail box of the CFO, Srinivas Vadlamani, the Bureau of Inves- tigation said. The two PwC auditors who oversaw the audit of… …auditors received an “exorbitant audit fee” several times the market rate. The two auditors were suspended from PwC and jailed in Hyderabad, charged with… …audit and consultancy firm KPMG in New Delhi. “For a long time, many found the subject boring, but that has changed now. We were busy pursuing a… …from carrying out consulting work for the companies they audit. There are numerous listed companies where the advisory arms of the audit firm earn… …York Times, January 8, 2009 Investors raise questions over PwC Satyam audit, Times Online, January 8, 2009 Scandal at Satyam: Truth, Lies and Corporate…

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