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L3 Notes_Part_1 - Symptoms Financial Greed hyper...

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Illegal Acts Situations affecting responsibilities Material and direct effect (e.g., tax liability) same resp. as SAS53 Indirect effect (contigent liability requiring a footnote) 1. you don't suspect illegality a. normal audit procedures, no duty to search reading minutes inquiry with client's attorney inquiry with client to determine means of preventing and detecting illegal acts. 2. you do suspect illegality a. inquire one level above suspected perpetrator b. consult with client's legal counsel c. consider accumulating additional evidence 3. you know an illegal act has occurred a. consider implications - are disclosures adequate b. reconsider relationship with client, did management know? If so consult your attorney c. communicate with audit committee 4. if it's material it's ultimately your responsibility 5. What does the company want to do? recover assets? cover up? fire employee? prosecute employee?
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© W.R. Knechel Who are the Fraudsters?
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