Assignment 1: Auditors and Regulatory Oversight
The Securities and Exchange Commission (SEC) regulates public companies. The SEC has found that some of these companies have violated GAAP by using creative accountingpractices to mislead investors and creditors regarding the health of their company.
Use the Internet or Strayer Library to research a recent accounting scandal within the last five (5) years where the SEC accused public companies of accounting irregularities.
Write a three to four (3-4) page paper in which you:
- Analyze the audit report that the CPA firm issued. Ascertain the legal liability to third parties who relied on financial statements under both common and federal securities laws. Justify your response.
- Speculate on which statement of generally acceptable auditing standards (GAAS) that the company violated in performing the audit.
- Compare the responsibility of both management and the auditor for financial reporting, and give your opinion as to which party should have the greater burden. Defend your position.
- Analyze the sanctions available under SOX, and recommend the key action(s) that the PCAOB should take in order to hold management or the audit firm accountable for the accounting irregularities. Provide a rationale for your response.
- Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.
Your assignment must follow these formatting requirements:
- Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
In January 2009 Satyam which is a multi-million dollar corporation collapsed due to an illegal creative accounting which can be termed as an accounting fraud. Satyam is and Indian company which falsified their revenue by 1.5 billion dollars. The founder of this company is Ramalinga Raju. He and his brother were charged but they were released because the charges were not filed in time. The chairman was caught from a letter..