xtemujin said:Ministry "honest overlook" ?
With millions of $$. Don't play play man.:sweat:
xtemujin said:Ministry "honest overlook" ?
redstone said:Why wasn't Richard Yong, the chairman investigated?:dunno:
xtemujin said:Does not look good as now the heat is on the accounting firm Pricewaterhouse instead of the Ministry not doing their job. Ministry "honest overlook" ?
AEC said:The common misconception centred on the understanding or more precisely, lack thereof on what are the auditors duties and responsibilities.
In the famous judgment on Kingston Cotton Mills (1896) more than hundred years ago, Lord Justice Lopes, perhaps unintentionally, shaped the very ethos of the audit profession for the next century by saying that :
"It is the duty of an auditor to bring to bear on the work he has to perform that skill, care and caution which a reasonably competent, careful and cautious auditor would use.
An auditor is not bound to be a detective or as was said, to approach his work with suspicion or with a foregone conclusion that there is something wrong. He is a watchdog, but not a bloodhound.
Auditors must not be made liable for not tracking out ingenious and carefully laid schemes of fraud, when there is nothing to arouse their suspicion ...So to hold would make the position of an auditor intolerable."
In the watchdog approach, the profession adopted a passive approach to an audit, together with an implicit presumption that the representations made by management could be and indeed should be relied upon.
The current Auditing Standard requires auditors to be more proactive and maintain an attitude of professional skepticism throughout the audit, notwithstanding the auditor's past experience about the honesty and integrity of management and those charged with governance as it recognizes the possibility that a material misstatement due to fraud could exist.
However, this standard does not require an auditor to be a bloodhound, it does seem to move well beyond the parameters of just being a watchdog.
In the light of recent corporate debacles in Singapore, the audit profession appears to have been caught off-guard again and made a scapegoat or was it?
In fairness, it will always be difficult for the auditor to detect fraud, particularly management fraud as the Auditing Standard focuses on the auditors responsibilities with respect to fraud and error in an audit of financial statements.
Hence, the prevailing view remains that audits are not designed to detect management fraud.
The primary responsibility for the prevention and detection of fraud and error rests with both those charged with corporate governance and the management of the entity.
The Companies Act expressly requires directors of every company to present financial statements that comply with the prescribed Financial Reporting Standards (FRS) and also reflect a true and fair view of the profit and loss, as well as the state of affairs of the company as at the end of the period to which it relates [Sections 201(1A), (3) and (3A)].
A director who fails to comply with these provisions would be liable upon conviction to a fine of up to $50,000 [Section 204(1)].
Auditors are similarly required to state in their Auditors report whether the accounts comply with the FRS and give a true and fair view of the companys profit and loss, as well as the state of affairs of the company [Section 207(2)].
True and fair view is not an accounting criterion. Rather, it is a legal test, as set out in case law, which is essentially that the accounts must not mislead the members or other interested stakeholders.
The accounts of each company must therefore pass a two-stage test. First, it should be prepared in accordance with and therefore comply with the FRS. However, compliance with the FRS is itself insufficient as it must also present a true and fair view, which is the legal test, to pass the second stage.
Should the audit profession move beyond the passive philosophy (Watchdog Approach) espoused in the judgment of Lord Justice Lopes or be a master of its own fate and push a radical reform agenda (Bloodhound Approach) to improve auditing and assurance standards that will meet the interest of the various stakeholders?
I believe that it would require a seismic shift in audit approach and coverage, thereby incurring higher auditing cost.
ricohflex said:the report is founded upon the scope laid out by the auditor.
based on paper documents.
which is why it was said in press conference someone fed up why previous audits found nothing wrong.
but of course !!!
an auditor can at the outset decide he will not ask such and such questions
he does not want to know. I repeat.
he does not want to know.
It is outside of the scope of his audit.
serious wrongdoings are not recorded on paper for you to conveniently audit.
will others be able to uncover criminal acts? wait and see.
reachme2003 said:he said mom is pressing charges, in consultation with ag's chambers. i do not think he said he is bent on taking (legal) action against them.
he admitted that he was misled, along with other vvvips.
vince123123 said:I'm not an accountant or an auditor, but from the last few posts, what then is the role of an auditor? Rubber stamping audit approvals based on the management saying that everything is fine?
AEC said:The common misconception centred on the understanding or more precisely, lack thereof on what are the auditors duties and responsibilities.
In the famous judgment on Kingston Cotton Mills (1896) more than hundred years ago, Lord Justice Lopes, perhaps unintentionally, shaped the very ethos of the audit profession for the next century by saying that :
"It is the duty of an auditor to bring to bear on the work he has to perform that skill, care and caution which a reasonably competent, careful and cautious auditor would use.
An auditor is not bound to be a detective or as was said, to approach his work with suspicion or with a foregone conclusion that there is something wrong. He is a watchdog, but not a bloodhound.
Auditors must not be made liable for not tracking out ingenious and carefully laid schemes of fraud, when there is nothing to arouse their suspicion ...So to hold would make the position of an auditor intolerable."
In the watchdog approach, the profession adopted a passive approach to an audit, together with an implicit presumption that the representations made by management could be and indeed should be relied upon.
The current Auditing Standard requires auditors to be more proactive and maintain an attitude of professional skepticism throughout the audit, notwithstanding the auditor's past experience about the honesty and integrity of management and those charged with governance as it recognizes the possibility that a material misstatement due to fraud could exist.
However, this standard does not require an auditor to be a bloodhound, it does seem to move well beyond the parameters of just being a watchdog.
In the light of recent corporate debacles in Singapore, the audit profession appears to have been caught off-guard again and made a scapegoat or was it?
In fairness, it will always be difficult for the auditor to detect fraud, particularly management fraud as the Auditing Standard focuses on the auditors responsibilities with respect to fraud and error in an audit of financial statements.
Hence, the prevailing view remains that audits are not designed to detect management fraud.
The primary responsibility for the prevention and detection of fraud and error rests with both those charged with corporate governance and the management of the entity.
The Companies Act expressly requires directors of every company to present financial statements that comply with the prescribed Financial Reporting Standards (FRS) and also reflect a true and fair view of the profit and loss, as well as the state of affairs of the company as at the end of the period to which it relates [Sections 201(1A), (3) and (3A)].
A director who fails to comply with these provisions would be liable upon conviction to a fine of up to $50,000 [Section 204(1)].
Auditors are similarly required to state in their Auditors report whether the accounts comply with the FRS and give a true and fair view of the companys profit and loss, as well as the state of affairs of the company [Section 207(2)].
True and fair view is not an accounting criterion. Rather, it is a legal test, as set out in case law, which is essentially that the accounts must not mislead the members or other interested stakeholders.
The accounts of each company must therefore pass a two-stage test. First, it should be prepared in accordance with and therefore comply with the FRS. However, compliance with the FRS is itself insufficient as it must also present a true and fair view, which is the legal test, to pass the second stage.
Should the audit profession move beyond the passive philosophy (Watchdog Approach) espoused in the judgment of Lord Justice Lopes or be a master of its own fate and push a radical reform agenda (Bloodhound Approach) to improve auditing and assurance standards that will meet the interest of the various stakeholders?
I believe that it would require a seismic shift in audit approach and coverage, thereby incurring higher auditing cost.
dkw said:Totally agree. Before the MOH lays into PWC, we need to know what the remit of the audit was. I'm really surprised that KPMG would be so critical of fellow professionals, knowing full well what the roles and limitations of a financial auditor are.
reachme2003 said:do you remember arthur andersen's role as auditors in Enron's? total disappointment in them.
reachme2003 said:fundamentally, they are competitors.
kpmg is doing "their share of national service" with regards to the scale and resources deployed in the latest audit. in the words of Ee, the massive audit would have cost $2 mill but kpmg is charging them $100K only. why?
MuthuCurry said:i has agreed to some of cser's comment. but pls bear in mind tt there is a limit and scope of duties of auditors, they can possibly check and drill every single pcs of info all the time. but, this does not exempt them from exercising due care during their work. Dun think it is a fair comments to put all the blame on KPMG or AA or PwC.
in NKF case, if the fraud is perpetrated by top mgt, there is even more difficult to be detected. mgt shld account for most of the blame for not having proper check and bal .
earthlings said:I think u are wrong. If we are talking about routine audit, then I got no say. But PcW was ask specifically to check for wrong doing over many times because of complaint. Yet they said everything was ok. Pcw failed to discharge their duties. Even Arthur Anderson has recommendation in their report which NKF ignore.
MuthuCurry said:i has agreed to some of cser's comment. but pls bear in mind tt there is a limit and scope of duties of auditors, they can possibly check and drill every single pcs of info all the time. but, this does not exempt them from exercising due care during their work. Dun think it is a fair comments to put all the blame on KPMG or AA or PwC.
in NKF case, if the fraud is perpetrated by top mgt, there is even more difficult to be detected. mgt shld account for most of the blame for not having proper check and bal .