A Response to Corporate Fraud
It is perhaps debatable. Have certain political and business leaders of this nation violated laws in recent years more than others did in the past? What is not debatable is that the public is now more aware of such transgressions.
Clearly, the public accounting profession is regarded by some institutions as uniquely qualified to uncover information about these transgressions. The public accounting profession does not, however, consider this its primary role in the attest function, nor does it believe the price of its doing so is justified.
While the outcome of this debate remains unclear, it is important to discuss some important ramifications of the issues raised. The following articles focus on three areas:
• What are the limits of responsibility shared by directors, corporate officers, and auditors concerning the discovery of fraudulent activity or illegal transactions?
• How can the financial executive work with the auditor both in identifying such transactions in his company and in determining adequate disclosure?
• What is the experience of one public accounting firm auditing a known fraud—namely Touche Ross at Equity Funding?
The editors invite your response to the questions raised.