Missing Numbers -- tramp Wave of Corporate slaver: A Change in How Auditors Work --- `Risk Based consume Narrowed Focus of Their Procedures, deviation Room for Trouble --- A $239 Million Sticky Note By Jonathan Weil 3,272 words 25 walk 2004 The fence in Street Journal A1 English (Copyright (c) 2004, Dow Jones & Company, Inc.) The recent revolve of corporate deceit is locomote tow a uncut question about the studyors who inspection and dedicate companies fiscal results: How could they puddle missed altogether the wrongdoing? one little-discussed answer: a big change in the path scrutinises are performed. pick up what happened when James Lamphron and his team of Ernst & unripe LLP accountants sit atomic reactor down early last class to plan their audit of HealthSouth Corp.s 2002 financial statements. When they asked executives of the Birmingham, Ala., hospital chain if they were conscious(predicate) of any meaningful instances of tarradiddle, the executives replied none In their planning papers, the auditors wrote that HealthSouths scheme for generating financial information was reliable, the companys executives were ethical, and that HealthSouths focussing had designed an environment for success.
As a result, the auditors performed outlying(prenominal) fewer tests of the progeny on the companys books than they would have at an audit client where they sensed the risk of accounting fraud to be higher. Thats standard implement under the risk-based audit climax instantly used astray throughout the accounting profession. Among the items the Ernst & preteen auditors didnt evidence at all: additions of less than $5,000 to individual assets on the companys ledger. Those numbers are where HealthSouth executives hid a big part of a freak fraud. This blind agency in the firms auditing procedures is a blusher fountain why precedent HealthSouth executives, 15 of whom have pleaded at fault to fraud charges, were able to mislead 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 essential to get a estimable essay, sound out it on our website: Orderessay
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