Auditing scandals is any specific scandal

Reference no: EM133657829

My current perception regarding audit is majorly influenced by the major steps taken after the associated scandals to protect and provide valuable independent verification of financial information.

According to Ferreira (2020), the auditing scandal caused a significant loss of public confidence in the auditors and the regulatory scrutiny intensified. This led to rigid regulatory actions and alteration in auditing standards to enhance the accuracy of financial reporting for publicly traded companies as it raised debates about auditor independence

The Sarbanes-Oxley Act (SOX) of 2002 took major steps to improve the auditor independence and corporate governance, it created Public Company Accounting Oversight Board (PCAOB). This decision was taken due to the Enron and WorldCom scandal to imposed stricter penalties for corporate fraud. The nation's regulatory bodies enhanced their oversight of accounting firms and public companies.

According to PCAOB (2023), the Sarbanes-Oxley Act instructed PCAOB to register audit firms, establish auditing standards, inspect the audit firms, and investigate, conduct disciplinary proceedings, and impose sanctions on auditors and audit firms as and when required. The auditor rotation and restrictions on non-audit services was emphasized to mitigate the chances of fraudulent activities.

The improvements resulted in strong internal control and improved audit procedures can deter and detect fraudulent activity which is supported by more rigid auditing standards and oversight to enhance the reliability of financial statements. The PCAOB's introduction provided a sense of accountability and security to the company and investors (PCAOB, 2023).

Answer the following questions:

1. In regards to auditing scandals is there any specific scandal that sticks out in your mind. What makes that scandal noteworthy in your mind?

2. In regards to SOX you mentioned that there were restriction on non audit services, which is true why would this cut down on the chance of fraudulent activities?

Reference no: EM133657829

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