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

Missing Numbers -- Behind Wave of Corporate drivel: A Change in How Auditors Work --- `Risk Based try Narrowed Focus of Their Procedures, Leaving Room for Trouble --- A $239 Million Sticky Note By Jonathan Weil 3,272 words 25 March 2004 The besiege Street Journal A1 English (Copyright (c) 2004, Dow Jones & Company, Inc.) The new-fangled wave of corporate deceit is ski tow a harsh question ab knocked out(p) the studyors who review and dedicate companies financial results: How could they have missed all the wrongdoing? one little-discussed coiffe: a big change in the path scrutinises be performed. Consider what happened when James Lamphron and his team of Ernst & boyish LLP accountants sit atomic pile down early last year to plan their scrutinize of HealthSouth Corp.s 2002 financial statements. When they asked executives of the Birmingham, Ala., hospital chain if they were aw be of any meaningful instances of fraud, the executives replied no. In their planning pap ers, the auditors wrote that HealthSouths system for generating financial reading was reli equal, the companys executives were ethical, and that HealthSouths management had designed an environment for success.

As a result, the auditors performed outlying(prenominal) few tests of the number on the companys books than they would have at an audit lymph node where they perceived the risk of accounting fraud to be higher. Thats trite practice under the risk-based audit approach instantly use widely throughout the accounting profession. Among the items the Ernst & Young auditors didnt evidence at all: additions of less than $5,000 to individual assets on the companys ledger. Those number s are where HealthSouth executives hid a big! part of a freak fraud. This dim spot in the firms auditing procedures is a key fountain why former HealthSouth executives, 15 of whom have pleaded guilty 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 want to get a full essay, sound out it on our website: OrderEssay.net

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