Problem:
Most major accounting firms rely on three main revenue streams:
Auditing services, Tax services & Business consulting.
Since the Securities and Exchange Commission (SEC) requires publicly traded companies to be audited by an external CPA firm, auditing can be a significant part of most accounting firms' revenue.
Review the Documenting Audit Findings scenario below.
Respond to the following questions:
What would you do if you were the junior auditor?
Should the auditor's notes be rewritten?
Documenting Audit Findings Scenario:
Audits are typically performed by a team of auditors led by one of the accounting firm's partners. The team keeps detailed notes during the process to document their findings. In this situation, the audit team was reviewing a business where a former corporate executive recently left the company under suspicion and controversy. During the audit, one of the auditors noticed that several key accounting records and files were missing. The junior auditor documented the observation in her notes and mentioned that such a discrepancy could be a sign of someone trying to cover-up embezzlement. The senior partner managing the audit strongly reprimanded the junior auditor for suggesting embezzlement in her report and ordered her to delete the reference.