Question

Discuss how the SEC approaches sanctions against auditors involving audits of publicly traded firms?

Answer 1

The securities and Exchange commission (SEC) serve as the administrator of federal securities law in US . SEC ensures that securities professional are fair to their clients and all Corporation make material information available to Investor , so this information help Investor to take correct decision .

SEC compliance should be a critical part of any Firm day to day operation. Specially SEC audit includes following points “

1. List of clients , tyoe of account and asset value
2. List of pricing
3. Copy of purchase and Sales Journal

Company needs ti ensure that business must comply with SEC regulation and standard .

As per SEC restriction – the rules represents accountant audit firm to eliminate the cases of conflicting Interest .

The mission of SEC is to protect Investors , maintain fair , efficient report and facilitate capital Information. Due to this SEC requites all publicly traded companies to disclose “ meaningful financial and other information to the Public “

Along with SEC , another board FASB aims to ensure that investor have useful information for making any Investment decision

SEC, FASB, GAAP – they are regulating Financial reporting and try to provide fair complete , transparent information to Investor , so they can take correct decision .

As per SOX Act 2002 and SEC rules are designed to ensure that auditors are independent of their audit Client.

As per rule , the audit committee should consider whether a relationship provided by Auditor includes

1. Any mutual or conflicting interest
2. Acting as management or an employee of the audit client

As per rule , specific prohibited in case of Non Audited service – like Bookkeeping , Actuarial service , Broker dealer and legal service if any

As per rue , certain relation also prohibited like “ employment relationship , contingent fees