Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

Lessons to learn *before* you get a call from a client saying they found an embezzlement fraud

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Would this call ruin your day?

You answer the phone and your client says:

“George, we just found out our controller has stolen about $70,000 per year for the last three years. Since you guys have been doing our audit, I thought I’d call and discuss what we need to do.” The caller does not verbally say it, but he intimates, “where were you guys?” and “how are you going to resolve this?”

That’s the sobering start to Charles Hall’s post at CPA-Scribo – Fraud Stings Auditor.

He outlines three mistakes you may have made on your latest audits:

The first mistake: Not clearly explaining to your client what an audit is, and, more importantly, what it is not.

The second mistake: Not communicating all significant weaknesses and material weaknesses in writing.

When there are weaknesses, you really need to advise your client of them. That puts the burden on management to fix the issues or take responsiblity for them staying on the long-term to do list.

Same point with repeat comments. Keep putting ‘em on the material weakness letter. Every year.

The third mistake: Inquiring of the same personnel year after year and not performing an annual fraud test (at least one).

You need to talk to different people.

If you are an auditor, you really should go read his lessons learned.

Written by Jim Ulvog

February 14, 2013, 7:48 am at 7:48 am

Posted in Audits, Fraud

Tagged with ,

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