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Focus on the relationship between the former senior manager, who now works for the client, and the former subordinate who has now been promoted. Although the particular fact pattern of the case has now been eliminated by the “cooling off period” of SOX, many parallels still exist in the current audit environment. Explore the vulnerabilities that may result because of trust built through working relationships. In the current environment, what situations create these vulnerabilities for auditors?

For Health Management Case: SOX Section 206 SEC. 206. CONFLICTS OF INTEREST. Section 10A of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1), as amended by this Act, is amended by adding at the end the following: `(l) CONFLICTS OF INTEREST- It shall be unlawful for a registered public accounting firm to perform for an issuer any audit service required by this title, if a chief executive officer, controller, chief financial officer, chief accounting officer, or any person serving in an equivalent position for the issuer, was employed by that registered independent public accounting firm and participated in any capacity in the audit of that issuer during the 1-year period preceding the date of the initiation of the audit.'.
Readings Health Management CASE FROM KNAPP BOOK http://www.nysscpa.org/cpajournal/2005/805/infocus/p22.htm [This link is broken; the article, titled “The Varying Concept of Auditor Independence: Shifting with the Prevailing Environment”, is posted in the Health Management folder] http://www.sox-online.com/soxact.html#sec206 [This link is broken; the article, titled “Sec. 206. Conflicts of Interest”, is posted in the Health Management folder] http://www.sec.gov/info/accountants/audit042707.htm http://en.wikipedia.org/wiki/Private_Securities_Litigation_Reform_Act http://pcaobus.org/News/Speech/Pages/06022011_DotyKeynoteAddress.aspx http://pcaobus.org/Rules/PCAOBRules/Pages/Section_3.aspx#Rule3526

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SIMPLIFIED
School: Purdue University

Attached.

OUTLINE

1. INTRODUCTION
2. BODY
3. CONCLUSION
4. REFERENCE


Running head: VULNERABILITIES IN AUDIT

1

Vulnerabilities in Audit
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Institution Affiliation
Instructor
Date

VULNERABILITIES IN AUDIT

2

Vulnerabilities in working relationships
Vulnerabilities often result due to the existence of trust created through the working
relationships, for instance, the consideration of the association occurring between the former
senior manager who currently performs for the client together with the former subordinate who
at the moment has received a promotion. During auditing process, the auditors are expected to
carry out a thorough personal inspection focused on identifying the potential crises that may
result based on the relationship that the involved individuals have to reduce the adverse effects of
the rising problems, (Thome et al., 2018). Therefore, the vulnerabilities that may occur due to the
trust made by the working associations of the senior manager and the promote...

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