Auditing Management Assertions: The Impact of SAS No. 106

The Auditing Standards Board (ASB) of the AICPA recently issued eight new statements on auditing standards (SASs), which are effective for audits of financial statement periods beginning on or after Dec. 15, 2006. Included within this new set of audit standards is SAS No. 106: Audit Evidence, which provides guidance on the use of management assertions in obtaining audit evidence

The ABCs of Communicating Results

Communicating results is an integral part of the internal auditor\u27s job, and The IIA\u27s International Standards for the Professional Practice of Internal Auditing recognizes its importance by specifying in Standard 2420 that communications should be accurate, objective, clear, concise, constructive, complete, and timely. In its 2009 survey. The Biggest Internal Audit Challenges in the Next Five Years, Protiviti, a global consulting firm, ranked communication with management and the audit committee as one of the biggest challenges facing internal auditing through 2012. Their subsequent 2010 Internal Audit Capabilities and Needs Survey identified presentation skills as the top need to improve personal skill of internal audit professionals. Clearly, the ability to communicate effectively continues to be an important issue within the profession. Any communication can be challenging — even when the news being delivered is positive — but when the news to be delivered is negative (e.g., identifying a control deficiency or alerting management to fraud), the job of delivering it can be even more stressful. In these situations, the internal auditor\u27s ability to communicate takes on increased importance. An organized, thoughtful approach can make that task easier and more constructive. Therefore, internal auditors should revisit some key steps to effective communication

Is Something Missing from Your Company\u27s Satisfaction Package?

Conventional wisdom suggests that salary, benefits, and other monetary factors are important aspects of keeping employees satisfied. But which factors have the biggest impact on overall satisfaction? While companies focus on the monetary factors, there are other components of the overall “satisfaction package,” that are just as important, yet often overlooked. It comes as no surprise that satisfied employees are important to the success of any organization. In short, higher satisfaction increases productivity, improves service levels, and positively impacts a company’s bottom line. While keeping employees satisfied should be an important goal for any organization, a recent job satisfaction survey by the Conference Board shows that job satisfaction has actually declined in the last nine years. So what should a company to do? Conventional wisdom suggests that salary, benefits, and other monetary factors are important aspects of keeping employees satisfied. But will giving these perks to a dissatisfied employee resolve the problem? Maybe in the short-term, but who has unlimited stashes of cash to buy satisfaction? Further, this “fix” is often short-term in nature

How to Use the Changing Components of the Corporate Annual Report

The amount of information required in a corporate annual report continues to increase. Most recently, additional reporting requirements brought about by the Sarbanes-Oxley Act of 2002 (SOA), the Public Company Accounting Oversight Board (PCAOB) and the Securities and Exchange Commission (SEC) increase the number of component reports that must be included in the annual report package. Lenders need to be familiar with the additional information that these new components provide. Therefore, this article summarizes the required component reports, discusses the information conveyed in each report and gives some examples of the types of significant new information that can be obtained

The Changing Components of the Corporate Annual Report: An Update

Recent regulatory changes affect not only the content of annual reports but also the population of companies that are required to comply with these reporting regulations. Lenders need to stay abreast of the information provided in corporate reporting packages. This article provides an update on regulatory changes and discusses how these changes affect the information that can be found in corporate annual reports

Audit Committee Effectiveness: A Synthesis of the Empirical Audit Committee Literature

The article describes the factors that contribute to audit committee effectiveness. An effective audit committee has qualified members with the authority and resources to protect stakeholder interests by ensuring reliable financial reporting, internal controls, and risk management through its diligent oversight efforts. The determinants of audit committee effectiveness includes the audit committee composition, authority, resources and diligence. The major U.S. stock exchanges require that audit committees be composed of at least three independent, financially literate directors. Team issues also are relevant when considering audit committee composition. The audit committee derives its authority from the full board of directors, federal law and exchange listing requirements. Authority is viewed as a function of the audit committees responsibilities and influence. Audit committee authority also depends on the audit committees relationships with management, external and internal auditors and the board as a whole. The resource component of audit committee effectiveness highlights that effective oversight is contingent upon the audit committee having adequate resources to do its job. Diligence is the process factor that is needed to achieve audit committee effectiveness

Sustainability Reporting: Opportunities and Challenges for Accountants

Sustainability has steadily emerged as an important public issue. As the demand for sustainability information grows, the issuance of corporate sustainability reports is becoming a mainstream practice. However, because sustainability reporting is not generally mandated, the form, quality, and reliability of sustainability reports vary widely. Accountants are well positioned to assist with improving the quality of sustainability information, both as preparers and as assurers of sustainability reports. Along with these opportunities come challenges, as standards for preparing, reporting, and assuring this information are not well developed, particularly in the U.S. This article provides an overview of the topics typically included under the broad heading of sustainability, including Corporate Social Responsibility (CSR), Environmental, Social and Governance (ESG), and Triple Bottom Line. Current frameworks and standards for sustainability reporting and assurance are discussed, along with key recent trends and developments in sustainability reporting. The article highlights opportunities and challenges for accountants, and concludes with advice and future directions for accountants who want to participate in this new frontier of corporate reporting by enhancing the quality of sustainability information

Review: \u27Making Creditor Protection Effective,\u27 by Michael J. Mumford and Alan J. Katz

In this monograph, the authors review “basic precepts about the protection of creditors by the great majority of U.K. corporations that are registered with limited liability.” (p. ix) In addition to examining the framework of U.K. company and insolvency laws, the authors include insights obtained through interviews of several individuals from a variety of organizations, and provide 24 recommendations for improving creditor protection in the U.K. The authors note in the preface that this monograph has been drafted with several readerships in mind: accountants, auditors, lawyers dealing with corporate clients, U.K. insolvency practitioners, bankers and financiers, and company directors and advisors

Sustainability Reporting: Opportunities and Challenges for Accountants

Sustainability has steadily emerged as an important public issue. As the demand for sustainability information grows, the issuance of corporate sustainability reports is becoming a mainstream practice. However, because sustainability reporting is not generally mandated, the form, quality, and reliability of sustainability reports vary widely. Accountants are well positioned to assist with improving the quality of sustainability information, both as preparers and as assurers of sustainability reports. Along with these opportunities come challenges, as standards for preparing, reporting, and assuring this information are not well developed, particularly in the U.S. This article provides an overview of the topics typically included under the broad heading of sustainability, including Corporate Social Responsibility (CSR), Environmental, Social and Governance (ESG), and Triple Bottom Line. Current frameworks and standards for sustainability reporting and assurance are discussed, along with key recent trends and developments in sustainability reporting. The article highlights opportunities and challenges for accountants, and concludes with advice and future directions for accountants who want to participate in this new frontier of corporate reporting by enhancing the quality of sustainability information

Divergent and Evolving Auditing Standards: Teaching Notes and Exercises

This chapter presents an approach for teaching divergent and evolving auditing standards in an introductory auditing course. The existence of divergent and continually evolving auditing standards can be challenging for students and for auditing educators. In addition to two separate sets of standards in the United States for the audits of public companies (issuers) and nonpublic companies (nonissuers), auditors also need to be aware of the growing prominence of international standards. In addition to providing background information on standard-setting bodies and divergent auditing standards, and suggestions for simplifying the process of guiding students to an understanding of these standards, this chapter provides figures that can be used for demonstration in class, along with a series of brief internet-based research exercises. The exercises and examples provided may help auditing educators to facilitate students’ understanding and mastery of the fundamental elements of the domestic and international auditing standard-setting forces and activities that impact, directly or indirectly, auditing practice in the United States and abroad