Professional Documents
Culture Documents
19th early 20th Century, Great Britain and US: detailed scrutiny of clerical
data relating to the balance sheet.
the Joint Stock Companies Act 1844: all companies to make their book
available for critical analysis of shareholder meetings.
the Companies Act 1979: all limited liability companies to submit to auditing
Early 20th Century, US: evolved from the more cumbersome British practise
into test audits, the demand for independent auditing, and more disclosure of
information from companies.
Before SEC, the US financial markets were under-regulated.
Stock market crash in 1929 causing the great depression. The Securities
Act (1933) and the Security Exchange Act (1934)
February 2010
PricewaterhouseCoopers Slide 2
A Historical Account of the Auditors role (cont)
Current environment late 20th early 21st century, improving the accuracy and
reliability of corporate disclosures and independent of auditing firm.
financial scandals at major corporations and conflict of interest in the
financial services industry (Enron like scandals)
Sarbanes-Oxley Act 2002:
- prohibits accounting firms from providing many consulting services for
the company they audit
- Requires audit committees to select and oversee the external auditor
- Strengthen the independency requirement of auditor from their client
- Establish Public Company Accounting Oversight Board (PCAOB)
Statement of Auditing Standard (SAS) No. 99:
- Improve auditing practise relating to auditors role in detecting fraud in
the audit.
February 2010
PricewaterhouseCoopers Slide 3
Financial Audit vs Investigative Audit
February 2010
PricewaterhouseCoopers Slide 4
Financial Audit vs Investigative Audit (Cont)
Conducted by examination
Methodology Audits are conducted primarily
by examining financial data documents; review outside data
such as public records;
interviews.
Presumption Require to approach audits with
professional skepticism Establish sufficient proof to
support or refute allegation of
fraud
February 2010
PricewaterhouseCoopers Slide 5
Before an investigation process: at a glance
February 2010
PricewaterhouseCoopers Slide 6
Psychology of the fraudster: a brief intro
February 2010
PricewaterhouseCoopers Slide 7
Circumstances that Allow Fraud to Occur (the fraud triangle)
February 2010
PricewaterhouseCoopers Slide 9
Professional Standard and Practises
February 2010
PricewaterhouseCoopers Slide 10
Code of Ethics (Association of Certified Fraud Examiners Code
of Professional Ethics)
February 2010
PricewaterhouseCoopers Slide 11
Code of Ethics (Association of Certified Fraud Examiners Code
of Professional Ethics) cont
February 2010
PricewaterhouseCoopers Slide 12
Thank You