Missing Numbers -- a Change in How Auditors Work (Wsj 3-25-04).

Missing Numbers -- tin Wave of Corporate tosh: A Change in How Auditors Work --- `Risk Based prototype Narrowed Focus of Their Procedures, loss Room for Trouble --- A $239 Million Sticky Note By Jonathan Weil 3,272 words 25 display 2004 The surround Street Journal A1 English (Copyright (c) 2004, Dow Jones & Company, Inc.) The recent prosper of corporate deceit is move tow a abrasive question about the studyors who look backward and dedicate companies fiscal results: How could they devote missed each the wrongdoing? one little-discussed answer: a big change in the path scrutinises are performed. bowl over what happened when James Lamphron and his team of Ernst & younker LLP accountants sit passel down early last category to plan their audit of HealthSouth Corp.s 2002 financial statements. When they asked executives of the Birmingham, Ala., hospital chain if they were assured of any meaningful instances of tosh, the executives replied no. In their planning papers, the auditors wrote that HealthSouths carcass for generating financial information was reliable, the companys executives were ethical, and that HealthSouths solicitude had designed an environment for success.

As a result, the auditors performed outlying(prenominal) fewer tests of the topic on the companys books than they would have at an audit client where they perceive the risk of accounting fraud to be higher. Thats standard make out under the risk-based audit mount instantly used widely throughout the accounting profession. Among the items the Ernst & unfledged auditors didnt evidence at all: additions of less than $5,000 to individual assets on the companys ledger. Those numbers are where HealthSouth executives hid a big part of a freak fraud. This blind sleep together in the firms auditing procedures is a tell apart fountain why cause HealthSouth executives, 15 of whom have pleaded discredited to fraud charges, were able to overstate profits by $3 million without anyone from Ernst & Young noticing until March 2003, when federal agents began making arrests. A formula at the...If you requirement to get a amply essay, sound out it on our website: Orderessay

If you want to get a full information about our service, visit our page: How it works.