In the aftermath of corporate scandals and the passage of the Sarbanes-Oxley Act of 2002 (SOX), the audit committee is vested with greater authority to oversee ﬁ nancial reporting and the appropriation of assets. As a result, the audit committee is responsible for adequate supervision and reporting and for responding to: • fraud in a ﬁ nancial statement audit;
• actual, perceived or potential conﬂ icts of interest;
• anonymous tips and complaints; and
• through interaction with general counsel, compliance matters such as those that relate to the Foreign Corrupt Practices Act (FCPA).
• Was the scope of the independent investigation sufficient? Why or why not? • If the audit engagement team determines that the scope of the investigation is not sufficient to support the preliminary conclusions reached, what additional procedures or inquiries might the engagement team suggest? • If those charged with governance or management fail to give this matter the appropriate level of consideration or take the steps necessary under the circumstances, what considerations should the audit engagement team give to the implications of possible fraud or illegal acts on the conduct of the audit? \
h different industry deﬁ nitions and viewpoints, fraud can be a tough issue for audit committee members to grasp for oversight purposes. The Institute of Internal Auditors (IIA), the American Institute of Certiﬁ ed Public Accountants (AICPA) and the Association of Certiﬁ ed Fraud Examiners (ACFE) collaborated in 2008 on landmark guidance that deﬁ nes fraud.
Fraud is any intentional act or omission designed to deceive others, resulting in the victim suffering a loss and/or the perpetrator achieving a gain.1 Separately, the IIA has deﬁ ned fraud as:
[a]ny illegal acts characterized by deceit, concealment or violation of trust. These acts are not dependent upon the application of threat of violence or of physical force. Frauds are...
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