Snapshot | August 2021
Tuesday, August 31, 2021
CAQ Issues Publication on Illegal Acts
Recent global corporate fraud scandals such as those related to Wirecard in Germany and Carillion in the United Kingdom have driven a focus by capital market participants on the auditor’s role in identifying and detecting fraud. As a result, certain audit regulators, including the International Auditing and Assurance Standards Board (IAASB) and the Public Company Accounting Oversight Board (PCAOB) have taken action with respect to fraud.
The CAQ recently released a resource, Illegal Acts: The External Auditor’s Responsibilities, to educate users of financial statements on the auditor’s responsibilities in regards to illegal acts under PCAOB auditing standards and how they differ from the auditor’s responsibilities as it relates to fraud.
Why it matters: Fraud can be inter-related to non-compliance with laws and regulations; however, the auditor’s responsibilities to identify and detect a material financial statement fraud can differ from the auditor’s responsibilities related to illegal acts such as those resulting from non-compliance with laws and regulations. Learn more here.
ESG Disclosures are on the Rise
It’s clear that public companies are increasingly engaging in ESG but a recent analysis the CAQ released in August showcases just how prevalent ESG reporting has become among the biggest public companies in the U.S. The analysis examined ESG reporting across S&P 500 companies as June 18, 2021 and found the following:
- 95% of S&P 500 companies had detailed ESG information publicly available.
- The information the CAQ examined was primarily outside of an SEC submission in a standalone ESG, sustainability, corporate responsibility, or similar report. Of the remaining 5%, most companies published some high-level policy information on their website.
- Roughly 6% of S&P 500 companies received assurance from a public company auditing firm over some of their ESG information.
Auditors may increasingly play a role in ESG assurance as the SEC considers new mandates and disclosures shift from being market driven to driven by regulatory need. For more insights on how auditors are assuring ESG information now, be sure to watch this interview with Yuri Zwick, Professional Practice Fellow at the CAQ and Wes Bricker, PwC US Vice Chair – Trust Solutions Co-Leader.
AFC Releases New Case Study: Oteal Pharmaceuticals
The Anti-Fraud Collaboration (AFC) published the 5th case study in its series of hypothetical fraud scenarios to provide those within the financial supporting supply chain and other relevant stakeholders with real experience working through a potential fraud environment and learning how to mitigate fraud risk in that environment. This case study, “Oteal Pharmaceuticals,” focuses on a fictitious pharmaceutical company and possible financial statement fraud.
Case studies are an effective tool to enhance fraud deterrence and detection skills. The AFC case studies “provide a venue for stakeholders in the financial reporting supply chain to truly engage in a group discussion about fraud. This is critical because they help participants better understand factors that create or augment fraud risks, and what can be done to mitigate such risks.” Hear more from members of the financial reporting ecosystem on how the case study benefitted them and download the latest AFC case study here.
Don’t Miss It: Building Trust and Confidence in ESG Reporting
The CAQ teamed up with Bloomberg to host a webcast for corporations and auditors tasked with implementing and enhancing their ESG reporting and assurance.
Join this robust discussion about the state of ESG reporting, and learn about valuable ESG reporting resources for public companies and auditors from Bloomberg Tax & Accounting, the AICPA and CAQ.
ICYMI: Leading the Headlines
- A shared commitment to informative, accurate and independent audits, Accounting Today
- Accounting Profession Says SEC ESG Rulemaking Should Leverage Work Done By Private Standard-Setters, Reuters Tax
- Accountants, Investors Rally Behind Identifying Chinese Auditors, Bloomberg Tax
- Is SEC Making Audit Regulatory Board Too Political?, Reuters Tax