A brief overview on the Statement of Auditing Standards including fraud and legal issues.

1. • Audit Documentation
• Consideration of Fraud in a Financial Statement
Audit
• Consideration of Laws and Regulations in an Audit
of Financial Statements
SAS

2. • Statement of Auditing Standards (SAS)
• Standards of the auditing profession pertain to
• documentation
• presentation
• responsibilities
• roles
• legal implications
Introduction

3. • Preparation work for the audit
• Working papers of the audit
• Information used to analyze financial statement accuracy and test
controls
• Cleanliness of the document for form and consistency
• Indexing and referencing
Audit Documentation

4. • Sarbanes-Oxley and SAS 99 requirements
• Managers are responsible for representing their statements
• Auditors are required to actively look for fraud and misstatements
• SOX 404 requirement of management and auditors, legal standard
• SAS 99 industry professional standard – due care
• SAS 82 was replaced by SAS 99
• First time in SAS the topic of fraud was specifically addressed
Consideration of Fraud in a Financial
Statement Audit

5. • SOX created fines and prison sentences for management’s
misrepresentation
• Auditors can also be held liable for “breach of contract, negligence, gross
negligence, and fraud.” (Messer, 2014)
• Auditors are not required under common law to guarantee their work,
but they are required to use due care in their work. (Messer, 2014)
• Due care: use of professional standards and manner in order to complete the
audit.
Consideration of Laws and Regulations in an
Audit of Financial Statements

6. • Audit Documentation
• Proper form and presentation for the ease of the user
• Consideration of fraud
• SAS 99 requires that auditors actively look for fraud
• Laws and Regulations
• SOX required managers to stand by their work
• Auditors can be held liable for not exercising due care to find fraud and
misstatements
Conclusion

7. References
• Bartow, M. B. (2012). Executive roadman to fraud prevention and
internal control. Hoboken, NJ: John Wiley & Sond , Inc.
• Messer, W. (2014). Auditing & assurance services a systematic approach,
9th edition. McGraw-Hill.
• Sarbanes-Oxley Act of 2002. (2002). Retrieved from Government Printing
Office : http://www.gpo.gov/fdsys/pkg/BILLS-107hr3763enr/pdf/BILLS-
107hr3763enr.pdf
References