As you read Chapter 4, you might have wondered how some of the events related to financial reporting and accounting missteps occurred. You may have asked yourself how could these situations have occurred given the checks and balances already in place in most organizations (and required by federal and state law if the organization is a corporation dealing with other people's money). Corporations, for example, are required to have an external auditing group examine and sign off on financial information in annual reports, prospectuses, and so on.
There are groups within organizations who are responsible for straight forward reporting of financial information. What are the responsibilities of management, auditors, and audit committees as they relate to providing accurate financial reporting? Please also comment on how you see these groups interacting in your organization.
Consider the following:
In the accounting and financial scandals of the past decade, where were the auditors? How did these financial fiascos happen? Please explain.
Does your organization have both internal and external auditors? Does it need them? Why?
How do management, auditors, audit committees and financial managers work together to provide accurate financial reporting?
What role does each of these groups have when it comes to accurate financial reporting?
Please also address whether you feel the auditors and financial managers at your organization are acting legally and ethically in their actions related to financial reporting perspective. How do you know that they are?