美国萨班斯·奥克斯利法案审计影响:留学生论文

引言——Introduction

审计过程被认为是检查账目和业务流程以及事业单位的过程。财务活动的凭证通过审计获得资格和被评估，是否遵循之前的言论将时刻接受法律形式上的检查，还会和相关人员讨论最终结果。在某一组织的财务审计过程中，审计员会收集一切与公司财务状况、经营活动成果和现金流的凭证，以此来检验公司提供的数据是否与政府标准相一致。本文引入了发生在2002年的萨班斯·奥克斯利法案，因为该案中涉案公司产生了大量的欺诈和伪造行为。因为欺诈行为和丑闻的曝光，笔耕文化传播，贸易公司的投资者在股份市场损失了数十亿资金。这一法案涉及到了会计服务的11个部分。萨班斯·奥克斯利法案审理之后，其中的会计师、审计员和会计专家们都被调换了。该案因参议员保罗.萨巴斯和代表迈克尔.奥克斯利而命名，这两人正是该案的主要谋后策划者。这一案件导致了财务审计部针对公司治理和财务策略的许多重大变化。

Introduction

The process of auditing is defined as a process of scrutinizing the accounts and business procedure of companies and business units. Evidences of asserted financial activities are obtained and assessed in the auditing process and the compliance of those assertions on the law abiding criteria is tested and results are discussed with the concerned user. During the financial audit of an organization the auditor collects all the evidences related to the financial position of the company, results of business operations, and cash flow to check the accordance of the provided data with the government criteria. The Sarbanes Oxley Act 2002 was introduced because of the increasing number of the frauds and forgery in the financial statement of companies. Because of these fraudulent and scandals the investors of the publically trading company lost billions of money in the share market. The act has 11 sections which deal with different aspects of the accounting services. After the inclusion of the Sarbanes Oxley Act in the accounting process the role of certified process accountant, auditors, and accounting professionals has completely changed. The act has been named after Senator Paul Sarbanes and Representative Michael Oxley who were the main creators of the act. The act made many major changes in the rules of corporate governance and financial strategies. This act implies on the public sector companies for the protection of the investors and increase transparency in financial audits. (Auditing, Attestation and Assurance.)

Sarbanes-Oxley Act 2002

This act was setup to keep a check over the frauds and improve the transparency in the financial system of a company. The Sarbanes-Oxley Act of 2002 is conceived by numerous people to be the most substantial legislative change in the profession of accounting. Following are some of the major points included in the act:

Responsibilities of financial reports of a company are given to CEOs and financial advisors and officers of the company.

Board of directors and executives of the company are not viable to take loans from their company.

Business activities related to executive officers are reported earlier.

Compensation and benefits given to executives are compulsory to be revealed.

Apart from the auditing by internal auditors the review and obtaining certificate from private auditors is mandatory.

Violation or exploitation of security is subjected to civil and criminal penalties.

Financial penalties and legal proceedings are stricter for executives for falsifying, altering, marring, or hiding the financial records of the company with the intention of obstructing or influencing the investigation. The account officer who knowingly or unknowingly violates the rule of maintaining the audit documents of last 5 years is also subjected to legal punishments or fines.

Actuarial, consulting and legal services cannot be provided by the private auditing houses for the company they audit.

Companies who sued to trade publically must demonstrate some strict financial controls and annual audit of these controls are mandatory.

The Sarbanes Oxley Act has imposed many rules and regulations to prevent the irregularities and mismanagement in the financial auditing of companies. Companies have to follow these rules and regulations as it is a very important act to reduce the risk of investors of public companies. Companies have put many internal controls on the financial reporting and auditing process. These certifications of controls and audit process have affected the auditing process and responsibilities of external and internal auditors. The new rules and laws of the act have significant impacts on the job of CPAs (auditors of public companies). (What Is the Sarbanes-Oxley Act?)

Impact of the Act on Auditing Profession

Following are some of the major impacts of the Sarbanes Oxley Act 2002 on the auditing, and accounting profession:

Public Confidence in the Profession.The Sarbanes Oxley Act was majorly focused on the enhancement of the integrity in the auditing process and correspondence between the auditing reports and the provided financial statements of the company. The SEC has always taken steps when required to strengthen the public confidence in the importance, efficiency and effectiveness of the auditors of the financial statements of a public company. In the UAE the rules of the SEC and the Sarbanes Oxley act have started to be beneficial for the improved integrity of public and private auditing. The auditing firms are also realizing the responsibility of their job and are very much critical about the integrity issues of the auditing profession. The public confidence has risen up in the auditing business because of the new regulations introduced in the Sarbanes Oxley act. (Donaldson., 2005)

Improved Financial Management and Revelation.Apart from the concern in the responsibilities of the executives of companies, the act has improved the level of transparency and financial reporting in organizations. For regulating the security standards in the finance management and reporting disclosure of reports and transparency of the process is a very important. Accuracy and reliability of the reports is fundamental principle of the reporting of financial activities according to the Sarbanes Oxley act.

Reliable and flawless financial reports and other useful financial information for the investors need to be produced and for such a high quality and revealing reports can be made only in the presence of an highly effective system that has internal control over financial reporting, auditing and other operational processes. Maintaining internal controls on financial reporting and auditing of publicly trading companies has been required since the Foreign Corrupt Practices Act of 1977 was introduced. But the these internal controls were done mandatory for the public companies and companies were promoted to spend sufficient amount of resources and care for implementing and maintaining these controls. The section 404 of the Sarbanes Oxley act 2002 has the potential to refine the financial reporting process of the public companies by identifying major loopholes in the operational and business system of the company. (Banks., 2003)

Auditing Education.The Sarbanes Oxley act has done many significant changes in the profession of accounting and auditing. So the key skills and knowledge that the student of accounting must acquire has also changed because of the skills required in the profession has changed. Because of the strict and wide rules and regulation of the act the students of accounting and auditing must have a clear understanding of the business risks so that they can indentify the risks involved in the profession. Auditors are required to have a wide knowledge of business and financial controls and documentation of the system. So the aspirants of the profession must learn to put controls to the assertion of financial statements and their substantial testing. (Arens & Elder, 2006)

Prime Opportunity for Internal Auditing Profession.The regulations of the Sarbanes Oxley act are turning out to be helpful for the internal audit department to increase its contribution in the improvement of the control structure of the organization in which they work. The audit committee of an organization now includes both the internal auditors and the auditor from external or private auditing firm. Each member of the audit committee works independently and all of them actively participate in the auditing and reviewing of the financial statements and the operations of the organization. The internal audit charter directly reports to the company’s top executive management. The audit committee can demand for an audit at the executive management level to ensure strong and effective corporate governance. The audits at this level include report on the following issues:

If the executive level management has any interest with the competitors, suppliers, or customers of the organization.

Ensure if the executives are complying with all the rules without any exceptions so the reports of their expenses are audited.

The reports of compensation and benefits given to the executives are reviewed to make sure that the compensation is the same as decided by the board of directors.

Earlier the internal auditing has never helped organizations to meet their strategic goals and objectives. These audits did not communicate with the management if the company is getting closer to their business objectives and goals. But after the Sarbanes Oxley act role of internal are decided and maintaining the efficiency and effectiveness of the role is mandatory for the committee. Previously the internal audit was focused on the risks in the business but now the internal auditing is done to identify and examine the risk involved in various processes. Internal and external audits are functioning together in a more coordinated manner. (Soileau, 2003)

Approach of Auditing

Before the Sarbanes Oxley act many methods and practices has been used by auditors in order to increase effectiveness and efficiency of the process of auditing but now those practices are not used and accepted for the integrity of auditing in publically trading companies of UAE. Some auditing firms in UAE used to do only some essential procedures but do not test the control structure which is now mandatory because of the implementation of the act. Testing of the controls was done in cycle rotation as specified by the AICPA. But now the auditing reports of the internal financial controls of the business have to be more comprehensive and elaborated and descriptive and to be produced annually so the cycle rotation is not done in the audit of the publically trading companies. (Banks., 2003)

An alternative way, minimizing testing of preventative controls, is also of no use in current auditing process. Preventative controls are the controls implemented at the transaction level used to ensure that the transactions in a company are recorded and authorized properly. Detective controls were used for populated transactions and disclose the problems after they occur. These controls are more cost effective. For maintaining high level of confidence and effectiveness adequatenumbers of tests are advised by the act to prepare reports of internal controls. Detective controls can be tested in case the expectations with the level of effectiveness are not very high. According to the Sarbanes Oxley Act the CPA must test the preventative and detective controls very effectively. (Banks., 2003)

Auditors require much more proofs and evidences of the previously described effectiveness of the operational controls to perform highly integrated auditing. These evidences can be used by the CPAs to minimize the time, cost, and extent of the essential processes which are followed for the reporting and auditing of financial statements. Auditors have to perform these essential processes and testing of transaction and analytical procedures. Whether the auditors have not found any substantial irregularity in the internal controls or not they have to perform all these processes without any failure. (Banks., 2003)

Responsibilities of Auditors

Responsibilities of the management and the auditors in UAE have been increased significantly in order to comply with the certificate provisions of the Sarbanes Oxley act of internal controls. The management of company takes possession of the identifying process, evaluation and documentation of specific internal controls, and deciding the business units to evaluate. The auditors are mostly engaged in testing the internal controls and providing reports and audits of them. The value of the process for many reasons should be evaluated by both the management and the auditors. Assessment of internal controls by the management increases the risk evaluation procedure. The assessment of the internal controls also increase the consciousness of controls and makes possible o reveal defective or duplicate control and scope of improvement if required. (How the Sarbanes-Oxley Act of 2002 Impacts the Accounting Profession)

Auditors Report to Audit Committee

Previously the work of auditors was supervised by the management of the company but now they cannot interfere in the auditing process because of the transparency issues so the reports of auditing will be prepared under the supervision of a auditing company which consists of CPA, internal auditors and external auditors.

Audit Committees Must Approve All Services

It is the function of the audit committee to approve all the services whether it is an audit or non-audit service.

New Information must be Reported to the Audit Committee.Information regarding accounting policies and practices that are going to be used any other alternate of some financial information that the auditor has discussed with the management, or some important and relevant conversation between the two must be reported to the audit committee by the auditor.

Offering Specified Non-Audit Services Prohibited

After the inclusion of the new act of auditing the auditing firms of the UAE are not able to provide any non audit services to the client whom they are already serving the auditing service.

Audit Partner Rotation

The auditor and the reviewer of a publicly engaged company must be changed after a period of 5 years.

Employment Implications

If any executive from the top level management (CEO, CFO, CAO etc.) of an auditing firm has worked with the company and was involved in the auditing process of the previous year then the firm cannot audit the financial records of the company. (How the Sarbanes-Oxley Act of 2002 Impacts the Accounting Profession)

Consulting Services

The Sarbanes Oxley Act has listed eight types of services which will be considered to be illegal if they are provided by the same auditing firm or the auditor to a publicly trading company. These services are: design and implementation of information system, bookkeeping, evaluation and appraisal services, actuarial services, internal auditing, human resource management services, broking, dealing, or investment related services, and legal advise related to auditing. So when previously before the act was in the picture many auditing firms used to provide one o the other kind of the services to the publicly company they are auditing. But to prevent the frauds in these companies the procedure of additional service providing is banned by the act. The act also holds the authority to prohibit any service it wants to. Non-audited services like taxation need to be pre approved by the auditors and must be revealed to the investors of the company. (How the Sarbanes-Oxley Act of 2002 Impacts the Accounting Profession)

Additional Responsibilities of CPAs

The Sarbanes Oxley act 2002 has directly affected the CPAs of publicly trading companies those who are working in the financial department. They must be aware of the changed responsibilities of executive officers and management of the companies. It is the duty of CPAs to get the company’s financial reports certified by the CEO and CFO of the company. Earlier the reports did not have to have any certification from the CEO or CFO of the company thus the CPA was exempted from this responsibility. The duty of CPAs also includes being in contact with the corporate auditing department which now will take care of all the auditing related activities like recruiting, paying and supervising the external auditors. According to the Sarbanes Oxley act there are some strict regulations about the disclosure and transparency of the financial reports and auditing which is now being handled by the CPAs. (How the Sarbanes-Oxley Act of 2002 Impacts the Accounting Profession)

Conclusion

Auditing is the process of examining and evaluating the accounts and cash flow of companies. The auditors use to assess the financial records and reports of the financial transactions of the company these records are evaluated and tested on the rules and regulations decided by the government and any irregularities are discussed by the concerned person in the organization which might be the CPA or a manager from the finance department or a executive person from the top level management. But for the past many years numerous frauds and falsifying cases have been recorded in the publicly trading companies. In 2001 a huge business leading company Enron debacle was reported for bankruptcy which was followed by loss in Tyco and WorldCom. In these companies thousands of investors have lost there millions of millions dollars. All these companies were publicly trading companies. Then the Sarbanes Oxley Act 2002 was introduced because the cases of such bankruptcy were increasing day by day and the main reason of these unlawful actions was the false statement and auditing of the financial statements of these organizations. The 11 sections of the act put a strict check on the regulations of the business operations of the company. In UAE the impacts of the Sarbanes Oxley act can be seen in every organization. This act has changed the attitude and the working process of both the companies and the auditing firms or the external auditors. After the implementation of the act in the auditing and accounting process of companies the profession has been upside down completely. This profession was seen with suspicion when the events of bankruptcy were noticed but the act has improved the position of the profession in public auditors are assigned with more responsibilities and a control over the compliance of auditing with the legal and fair practices of auditing are ensured. The main reason behind the collapses of many business units was the hidden reporting of financial reports. But a spirit of transparency and disclosure of the financial records to the stakeholders of the company is being spread by the SOX act. The Sarbanes Oxley act 2002 has been a wonderful amendment in the field of auditing. Because of the act the environment and culture of companies and auditing firms in the UAE has changed from tip to toe in the past 8 years. The act has been proved a boon for the investors of the publicly trading companies.