Jun 20

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New Rules Aimed At Increasing Auditor Scrutiny Of Critical Fraud Areas

With its new audit standards and amendments aimed at specific transaction types, the Public Company Accounting Oversight Board (“PCAOB”) has targeted three critical areas in its ongoing efforts to combat financial reporting fraud.  A more comprehensive article found here describes the new rules to heighten auditor scrutiny regarding (i) related-party deals, (ii) significant unusual transactions, and (iii) financial relationships with executives.

The new rules will need to be approved by the SEC, but are expected to become effective for audits of interim financials and financial statements involving fiscal years beginning on or after December 15, 2014.  As previously described by the SEC, the auditor is

the only professional that a company must engage before making a public offering of securities and the only professional charged with the duty to act and report independently from management”.

This increased scrutiny should improve the critical gatekeeping function played by auditors.

About the author

Renee Howdeshell

Renee Howdeshell is a founding member of Fulcrum Inquiry, an accounting, finance and economic consulting firm that performs damage analyses for commercial litigation, forensic accountings, royalty & distribution audits, financial investigations, and business valuations. Ms. Howdeshell holds a degree in Finance and Marketing from the University of Virginia's McIntire School of Commerce and is a Certified Public Accountant (CPA) and a Certified Fraud Examiner (CFE). She has testified as an expert witness in federal court, CA state court and arbitration regarding the results of her work. She can be reached at (213) 787-4112 and her resume is available at www.fulcrum.com.

Permanent link to this article: http://betweenthenumbers.net/2014/06/new-rules-aimed-at-increasing-auditor-scrutiny-of-critical-fraud-areas/

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