Auditors and fraud: precise regulation will be difficult

Article Abstract:

According to Britain's Department of Trade and Industry, legal definitions of fraud lack specificity, because the line between commissions and bribes, or between related-party transactions and breach of trust, is difficult to draw. In Britain, only courts of law are capable of determining whether fraud exists, and then only after the suspect act has been committed. The legal concept of fraud is discussed in terms of its effect on auditors' actions and reporting responsibilities. Two types of fraud are described: fraud against the audit client, and fraud against parties outside the audit client company. Employee fraud is also defined, as are reporting actions to be taken upon the discovery of fraud.

Laws, regulations and rules, Ethical aspects, Auditors, White collar crimes, White collar crime

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Users of accounts want more than just true and fair

Article Abstract:

In 1948 Great Britain changed the phrasing required by law to be included within audit opinions from 'true and correct' to 'true and fair', although no legal definitions of these word or rules for when such wording is to be applied to accounts reviewed has been handed down by Parliament. With the increasingly widespread use of audited accounts by investors and the general public, the meaning of the phrase 'true and fair' when applied to audited financial statements is becoming more crucial, especially in cases involving bankruptcy. This dilemma and the accounting standards relevant to the controversy are discussed.

Usage, Accounting firms, Accounting services, Financial statements

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Fraud, materiality and negligence: some audit posers

Article Abstract:

Although outside auditors should avoid spending their time reviewing and inspecting 'immaterial' items (since these reviews can unnecessarily increase the client's cost for the audit), auditors should review and investigate immaterial items since these reviews generally are the best at detecting the presence of fraud. The usefulness of petty cash tests as part of the auditing process and the consequences of audit negligence in Great Britain are also discussed.

Standards, Analysis, Management, Accounting, Fraud investigation

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