[External Auditors' Role in Detection of Corporate Fraud]

by

Acknowledgement

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Abstract

The purpose of this paper is to examine whether the external auditor traits influenced the reporting of internal control deficiencies (ICDs) before SOX-mandated audits, keeping the existence of a control weakness. Data are collected from public sources as documents for the Securities Audit and database Google Analytics. The companies that were audited by industry leaders were more likely to reveal DAI before SOX-mandated audits and firms with greater ownership of the client-auditor were less likely to reveal LAD before SOX-mandated audits. These results suggest that while the external auditors were not required to participate in the evaluation of internal control and certification prior to internal control audit for fiscal year 2004, however, influences the likelihood of disclosure CIE before their initial audit.

External Auditors' Role in Detection of Corporate Fraud

Chapter I: Introduction

Introduction

This study examines the impact of the external auditors of the reporting enterprise quality of information that is not subject to external audit. Specifically, it examines the impact of auditor reporting on the signing of internal control deficiencies (ICDs) before the Sarbanes-Oxley (SOX), mandated audits.

To test the link between the characteristics of auditing and reporting of the company, internal control reports issued by the direction in Section 302 of SOX are used. This section requires CEOs and CFOs to certify in each quarterly and annual assessed the company's internal controls "as of a date within 90 days before the report" and presented their findings on the effectiveness of controls at the quarterly or annual report. This requirement applies to all quarterly and annual reports from August 29, 2002.

The requirements of SOX internal control reporting to provide an ideal framework to examine the impact of the auditors of the company reporting in the absence of the audit. Under Article 302, management is required to perform control assessments; however, the auditor is not required to evaluate the management evaluation of quality control or to carry out its own assessment control. From fiscal years ending after November 15, 2004, Section 404 of SOX requires the external auditor the financial statements to audit the company's internal controls over financial reporting and issue an opinion on the annual presentation regarding their effectiveness and the opinion of a management assessment of internal controls regarding. Therefore, since the period of August 29, 2002 until the end of the firms first fiscal year from November 15, 2004, the reporting decisions of the company regarding the quality of internal control were controlled by management and other governance bodies. The external auditors had no responsibility in this ...