ABSTRACT
The most onerous provision in Sarbanes–Oxley, from the business community’s viewpoint, was Section 404. The Enron and WorldCom scandals prompted the Auditing Standards Board to issue yet another new standard addressing financial statement fraud. Statement on Auditing Standards (SAS) No. 99, Consideration of Fraud in a Financial Statement Audit, superseded SAS No. 82 for periods beginning on or after December 15, 2002. SAS No. 99 requires audit teams to hold a “brainstorming” session during which auditors discuss where fraud is most likely to occur. The dual objectives of the brainstorming session are to identify areas of risk and instill in the audit team a proper degree of professional skepticism. SAS No. 99 also requires audit team members to interview senior management, audit committee members, internal auditors, operating personnel, and in-house legal counsel regarding suspicious transactions and client procedures to prevent, deter, and detect fraud. The Sarbanes–Oxley Act established a five-member committee to regulate auditors of publicly traded companies.
