Nine Steps to Optimization of the Audit Committee

The audit committee, and its membership, are keys to the success of business operations. If the audit committee fails in executing its duties, there could be grave consequences for the entity, particularly in the areas of financial reporting and controls over the integrity of the financial reporting process. Without proper governance, monitoring and risk assessment…

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Failures Begin With Planning Deficiencies

The author – a former auditor and longtime litigation consultant – has found that, like Tolstoy’s happy families, virtually all inadequately performed audits are alike. In the audit failure arena, they almost inevitably exhibit fatal flaws in their planning processes. Litigators seeking to establish accountant liability in malpractice cases – as well as those charged…

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Understanding How Auditors May Be Exposed to Accountants’ Negligence and Malpractice Suits by Failing to Properly Assess An Entity’s Internal Controls

Gaining an understanding of an entity’s system of internal control is a critical component of conducting an audit. The American Institute of Certified Public Accountants mandates in the body of professional guidance known as Generally Accepted Auditing Standards (“GAAS”) — specifically, within Field Work Standard No. 2, that auditors perform this fundamental exercise at the…

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Five Strategies for Audit Committees to Rebuild Public Trust and Confidence in Financial Reporting

Management fraud and auditor failure to find that fraud have received the greatest share of attention to date; and relatively less attention has been directed at the role of audit committees in these financial reporting failures. The current cycle of financial reporting scandals has already caused further attention to be given to the issue of…

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Litigation Risk

Auditor liability and malpractice, stemming from allegations of failure to appropriately respond to clients’ risk of material misstatements due to fraud, is an area ripe for litigation, specifically when fraud and material misstatements are subsequently revealed to have affected the financial statements.  Although a “clean” audit report is not an absolute guarantee of accuracy, auditors…

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