SEC official advises auditors shift mindset on fraud detection
The Securities and Exchange Commission (SEC) believes auditors play a pivotal role with respect to fraud detection. Those auditors that tell stakeholders otherwise could draw the ire of the agency in its future enforcement efforts.
Paul Munter, acting chief accountant at the SEC, issued a statement Tuesday highlighting auditors’ responsibilities in fighting fraud, including his office’s recent observations of shortcomings in the area. Among the deficiencies he noted was auditors framing discussions of their responsibilities related to fraud by describing what they are not required to do instead of what they can provide—an approach Munter labeled as “particularly troubling.”
“We find this attitude of focusing on the limits of the auditor’s responsibilities at the outset as opposed to the affirmative requirements with respect to the responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement, whether caused by error or fraud, deeply concerning, as it could impact an auditor’s mindset or their degree of professional skepticism and may thereby reduce the likelihood of fraud detection and potentially result in dereliction of professional responsibilities to the public trust,” he said.