Executive Roadmap to Fraud Prevention and Internal Control: Creating a Culture of Compliance, 2nd Edition

CHAPTER 4

The Path to Greater Corporate Compliance, Accountability, and Ethical Conduct

SAS 99 to the 2010 Amendments to the Federal Sentencing Guidelines for Organizations

EXECUTIVE SUMMARY

Improved corporate compliance and stricter enforcement did not end with the enactment of Sarbanes-Oxley in 2002. The American Institute of Certified Public Accountants released their Statement on Auditing Standards 99, an auditing standard that now requires greater involvement of external auditors in developing reasonable assurance that an entity's financial statements are free of material misstatements whether by fraud or error. The government gave strong guidance to federal prosecutors in its historic “Thompson Memo” of how and when to bring criminal charges against an organization. In the process, the government sent a chilling message to corporations that cross the line. The Securities and Exchange Commission drove home the important role of “gatekeepers” in protecting the interests of the investing public and the government. The government greatly enhanced prison sentences for fraud so that a fraud conviction could now bring a life sentence. Other compliance enhancements followed, all leading the way toward the creation of a culture of compliance.

THE SAS 99 FIX

After several tries and the inability to detect massive financial statement frauds, the accounting industry may have finally gotten it right. In December 2002, the new Statement on Auditing Standards (SAS) 99, Consideration ...