Description
"Audit Risks" Please respond to the following:
- Use the Internet or visit the Securities and Exchange Website, located at http://www.sec.gov/, to research at least two (2) sanctions levied against companies that have violated general accounting principles. Next, briefly analyze whether or not investors who were misled by relying on financial statements could hold the audit firm liable for audit failure either by common or securities laws. Provide a rationale for your response.
- According to an article in the CPA Journal, the accounting profession has long contended that an audit conducted in accordance with generally accepted auditing standards (GAAS) provides reasonable assurance that there are no material misstatements contained within financial statements. Suggest at least two (2) alternative methods that auditors can use to provide a more concrete level of assurance to investors. Provide support for your responses with examples of such methods in use.
Explanation & Answer
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Running Head: AUDIT RISKS
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Audit risks
Name
Institution of Affiliation
Date
AUDIT RISKS
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Various sanctions or penalties are enacted against companies that fail to adhere to general
accounting rules. Therefore these sanctions have been put in place to keep companies in line and
maintain credibility, honesty, and integrity as they go about their accounting duties. These
sanctions are such as; SEC enforcement action which is highly prioritized on foreign corrupt
practices act (FCPA) enforcement. It also gave birth to a more specialized unit that hinders
companies from issuing stock in the U.S through giving bribes to foreign officials so as to
acquire Government contracts as well as businesses(Mahoney & Bureau of National Affairs
(Arlington, 2016). The second sanction is the Sarbanes Oxley Act (SOX). It was established
back in 2002 as a result of substantial financial scandals involving big comp...
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