FIGHTING FINANCIAL FRAUD WITH COLLECTIVE ACTION
Financial reporting stakeholders play a collective role in deterring and detecting fraud at public companies. When all the links of the financial reporting supply chain are strong, the whole chain is strong.
What stakeholder groups exist in this chain?
Public company management is on the front lines of the fraud fight. They are responsible for assessing fraud risk, implementing the controls to deter and detect fraud, and certifying financial reports.
Independent audit committees oversee company financial reporting as well as the internal and external auditors.
Internal auditors can evaluate management’s measures to reduce the risk of fraud and report back to the audit committee. They can also design and enforce financial controls to help ensure compliance with financial reporting requirements.
The auditor plans and performs the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by fraud or error.
Regulators establish and enforce rules seeking integrity in financial reporting.
This is a nontechnical document and should not be relied upon as being definitive or all-inclusive, or a substitute for PCAOB and SEC rules, standards, guidance, or other resources related to detecting, deterring, and preventing fraud.