Not too long ago, the profession is attack by the important fraud scenario affecting India's IT Giant- Satyam. Satyam accepted that he has committed fraud, a part of the action involves: inflating cash and bank account balances by $1 Billion dollar!
This professions are asking yourself how could the auditor miss out such a massive misrepresentation of cash and bank balance. Normally, audit procedures consist of:
- getting bank confirmation straight in the client's banker
- agree with cash and bank balance per Trial Balance amount to Bank Statement
The validation and the bank statements present a specific amount of audit comfort zone, provided that it really is an independent party confirmation, in lieu of client-generated proof.
Nonetheless, Pricewaterhouse Coopers, that are the auditor for Satyam Computer Services Ltd, claims that the audits have been carried out relative to applicable auditing standard and have been adequately supported by audit proof. Apparently, the fraud can not be quickly found by getting bank confirmation. If not, it wuld have already been found, provided that Pricewaterhouse Coopers has been the auditor of Satyam for various years.
We shall wait for additional news / reports then.
