LAW 122 Chapter Notes - Chapter 15: Public Company Accounting Oversight Board, Financial Audit, External Auditor
27 Nov 2017
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Document Summary
Describes the audit environment, layers of standardization and professional self-regulation that have evolved to uphold the quality of audits. The audit environment has undergone a profound change following several spectacular corporate failures, such as enron and worldcom in 2002 and the economic crisis in 2008/2009. As a result of these failures, the integrity of capital markets is being questioned all over the world. In 2002, drastic legislation was passed in the united states. Before 2002, the accounting profession was largely self-regulating. Self-regulation: the profession itself established the rules governing audit practice and monitored compliance with them. These developments highlight the importance of controlling information risk and agency problems. These audit standards are formal requirements auditors must meet in carrying on an audit. Control information risk through quality control standards of audit practice. To ensure that these standards are implemented in practice, the accounting profession is monitored externally by cpab in canada and through self-regulation.
