Improving the clarity & overall
understandability.
Consistent application of its ISAs
Sarbanes - Oxley Act 2002
Applies to all companies that are required to file accounts in the USA.
AIM:- Oversee the auditors of public companies.
PURPOSE:- Protect the interests of investors.
POWERS:- Setting auditing, quality control, ethics, independence and other standards.
Also has the authority to regulate the non audit services that audit firms can offer.
Crriticised for not being strong enough, over-rigid, compliance industry irrespective of
significance, distracted co's from improving information flows.
Audit Commitees
At least 3 independant non-executive directors.
Roles & Responsibilities:-
Monitor integrity of the financial statements.
Review internal financial controls, internal control & risk management
system.
Monitor & review effectiveness of the internal audit function.
Make recommendations to the board, appointment, re-appointment, removal of auditors.
Review & monitor auditor's independence, objectivity & effectiveness of the audit process.
Advantages:-
Provides an independent point of reference.
Increased confidence in financial reports (Credibility & Objectivity)
Allow ex directors to concentrate on management.
Impartial body for auditors to consult.
Disadvantages
Difficulty selecting NED's with the necessary competence.
More formalised less judgement more matters of fact.
Increased Costs.
Money Laundering
Process by which criminals attempt to conceal the true origin and ownership of the
proceeds of their criminal activity, allowing them to maintain control over the proceeds.
Placement:- of the illegal funds into the financial system.
Layering:- Large number of transactions, making it very difficult to trace.
Integration:- 'clean' money to spend.
Accountants Obligations
Keep records of clients identity.
Report suspicions to SOCA.
Gather KYC information, understand your client well enough to spot unusual business activity.