Department

School of Accountancy

Document Type

Article

Publication Date

4-2001

Abstract

The article focuses on financial statement fraud based on cases wherein the U.S. Securities and Exchange Commission sanctioned auditors for their association with fraudulent financial statements. All of the cases involved public companies, most of which engaged ill fraudulent financial reporting. Only a few engaged in misappropriation of assets or defalcation. The most common problem, alleged in 90% of the cases, was the auditor's failure to gather sufficient evidence. In some instances, this failure was pervasive throughout the engagement while in other instances the allegations were more specific. For example, many of the cases involved inadequate evidence in the areas of asset valuation, asset ownership and management representations. Some cases involved the auditor's failure to examine relevant supporting documents or failure to perform steps listed in the audit program. Overall, this failure contributed to management's success in overstating assets, the most common fraud technique.

Journal

Journal of Accountancy

Journal ISSN

0021-8448

Volume

19

Issue

1

First Page

63

Last Page

66