Presentation is loading. Please wait.

Presentation is loading. Please wait.

Au 317: Illegal Acts by Clients

Published byMaría Soledad Godoy de la Fuente Modified over 5 years ago

Similar presentations

Presentation on theme: "Au 317: Illegal Acts by Clients"— Presentation transcript:

1 Au 317: Illegal Acts by Clients
Dr. Donald K. McConnell Jr. 11/18/2018

2 Client Illegal Acts Background: The Fund of Funds Case
What are illegal acts? Sharp distinction in auditor responsibilities: Direct effect illegal acts Indirect effect illegal acts Procedures in absence of evidence concerning illegal acts Symptoms of illegal acts Auditor responsibilities Audit report effects 11/18/2018

3 The Fund of Funds Case Lead to issuance of this SAS
$80 million judgment against the auditors Facts of the case 11/18/2018

4 What Is an Illegal Act? Violations of laws or governmental regulations (Au 317.02)
11/18/2018

5 Sharp Distinction in Auditor Responsibilities
Should auditors be responsible for all client illegal acts? Not feasible to design an audit to provide reasonable assurance of detecting all illegal acts Two types of illegal acts: Direct effect illegal acts Indirect effect illegal acts 11/18/2018

6 Direct Effect Illegal Acts (Au 317.5)
Result from accounting or finance improprieties As accountants we are trained to recognize direct effect illegalities! Auditor must test compliance with relevant laws: Revenue streams may be dependent upon compliance Liabilities may inure from noncompliance Auditor responsibility the same as for material fraud 11/18/2018

7 Indirect Effect Illegal Acts (Au 317.6)
Result more from operating improprieties, e.g. OSHA violation Auditor cannot be expected to detect indirect effect illegal acts Auditor probably wouldn’t even know about unless management or client legal counsel told us! Auditor responsibility therefore less than for material fraud 11/18/2018

8 Audit Procedures in Absence of Evidence Concerning Illegal Acts
Must auditor design procedures intended to detect illegal acts? Routine audit procedures which may point to existence of illegal acts [Au ]: Reading minutes of the Board Inquiry of management Inquiry of attorneys via attorneys letters (subsequent events procedure) Performing substantive tests of details Management rep. letter (Au 333) 11/18/2018

Download ppt "Au 317: Illegal Acts by Clients"

Similar presentations

Chapter 17 Completing the Audit Engagement McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 17 Completing the Audit Engagement McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 24 Completing the Audit

Chapter 24 Completing the Audit
Chapter 14 Completing the Audit.

Chapter 14 Completing the Audit.
Completing the Audit Engagement

Completing the Audit Engagement
Completing the Audit Chapter 16 Professor Juan M. Garcia.

Completing the Audit Chapter 16 Professor Juan M. Garcia.
Learning Objectives LO1 Describe the balance sheet account groups that the major revenue and expense accounts are associated with, as well as the substantive.

Learning Objectives LO1 Describe the balance sheet account groups that the major revenue and expense accounts are associated with, as well as the substantive.
Management Fraud and Audit Risk

Management Fraud and Audit Risk
Understanding the Client and General Planning

Understanding the Client and General Planning
Chapter 17 Completing the Engagement McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved.

Chapter 17 Completing the Engagement McGraw-Hill/Irwin ©2008 The McGraw-Hill Companies, All Rights Reserved.
Professional Standards. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 2-2 Generally Accepted Auditing Standards-- General.

Professional Standards. McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. 2-2 Generally Accepted Auditing Standards-- General.
Chapter 6 Audit Responsibilities and Objectives

Chapter 6 Audit Responsibilities and Objectives
Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-1 Chapter Seventeen Completing the Engagement Chapter Seventeen.

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 17-1 Chapter Seventeen Completing the Engagement Chapter Seventeen.
D-1 McGraw-Hill/Irwin ©2005 by the McGraw-Hill Companies, Inc. All rights reserved. Module D Internal, Governmental, and Fraud Audits “I predict that audit.

D-1 McGraw-Hill/Irwin ©2005 by the McGraw-Hill Companies, Inc. All rights reserved. Module D Internal, Governmental, and Fraud Audits “I predict that audit.
Chapter 16 Auditing Operations and Completing the Audit McGraw-Hill/IrwinCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 16 Auditing Operations and Completing the Audit McGraw-Hill/IrwinCopyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved.
Monica J. Stern, Certified Public Accountant. What is an audit? An audit is a prescribed process a Certified Public Accountant applies to your financial.

Monica J. Stern, Certified Public Accountant. What is an audit? An audit is a prescribed process a Certified Public Accountant applies to your financial.
Case 6.3 WorldCom Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.

Case 6.3 WorldCom Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.
Fundamental Auditing Concepts. Materiality Evidence Independence Audit risk IS and general audit responsibilities for fraud Assurance.

Fundamental Auditing Concepts. Materiality Evidence Independence Audit risk IS and general audit responsibilities for fraud Assurance.
©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 10 - 1 Internal Control and Control Risk Chapter 10.

©2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley Internal Control and Control Risk Chapter 10.
Chapter 17 Completing the Audit Engagement McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 17 Completing the Audit Engagement McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 3 Audit Planning, Types of Audit Tests, and Materiality McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 3 Audit Planning, Types of Audit Tests, and Materiality McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Similar presentations

Ads by Google