2005.Cook - E&Y Global Audit Methodology Responding to the...

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# e E&Y Global Audit Methodology: Responding to the New Environment University of Illinois at Urbana-Champaign March 10, 2005
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2 # e Topics Regulatory Backdrop Historical Timeline of Key Events Sarbanes-Oxley Act of 2002 Creation of PCAOB Responding to the New Environment Recent Changes to E&Y Global Audit Methodology Integrated Audit of Internal Control and Financial Statements Identifying and Responding to Fraud Risks Discussion/Questions
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3 # e 1933 & 1934 Securities Acts First auditing standar ds issued Auditing standards consolidate d Auditing standards consolidat ed, name changed to AudSEC AudSEC, now ASB, sets rules for audits AICPA issued accountin g standard s FCPA issued, POB created, peer review required by AICPA Accounti ng standard s moved from AICPA to FASB QCIC establish ed CPE required by all AICPA members Stock market crash Creation of the SEC Sarbanes -Oxley Act, PCAOB formed Regulatory Backdrop: Timeline of Key Events 1929 1933-34193 9 1938- 1959 196 1 197 2 197 7 197 8 197 9 199 0 200 2 1929 Speculat ive boom leads to crash 1929- 1934 Nervous investors, low integrity market 1934–1995 Growth in capital markets increases need for standards, quality, and controls 1995– 00 Dot.co m era 2000- 01 ENRON Worldc omAnd ersen 2002- Now Corpor ate reform, econom ic rebuild
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4 # e Sarbanes-Oxley Act of 2002 (SOA) Most significant federal securities legislation since 1933/34 Securities Acts; Renewed focus on corporate governance practices and financial reporting integrity and transparency SOA aims to: Improve reporting/disclosures (e.g., new requirement to report on internal control – Section 404) Strengthen corporate governance (e.g., new standards for audit committee practices) Expand insider accountability (e.g., new requirements for code of ethics and protection for whistleblowers) Increase oversight (e.g., creation of PCAOB; increased SEC review of company filings on 10-K/10-Q) Broaden sanctions/penalties (e.g., criminal penalties
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2005.Cook - E&Y Global Audit Methodology Responding to the...

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