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Taking into consideration the Government Auditing Standards, why would an independent public accountant consider it their...

Taking into consideration the Government Auditing Standards, why would an independent public accountant consider it their responsibility to report suspected fraud to any person(s) or entity during the audit of a state or local government?

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Expert Solution

An independent public accountant should report every suspected fraud during audit because of following reasons :

  • The fraud being done in the audit would lead to misguide the stakeholders concerned with it and this would be violation of laws against the interest of stakeholders. All the individuals investing in the company would not able to know the right position of the company, thus can take a wrong decision regarding making investments.
  • Any fraud could further lead to causing problems to the concerned organization whose audit has been done as that organization would be made responsible for committing fraud to make changes in its audit for its own profit and have to pay penalty for that.
  • Also, the one who is doing the audit--public accountants, if does not report of the fraud, will be held responsible for hiding the fraud from authorities and could be punished for this act.
  • Any fraud not been reported would lead to further disturbances in preparing financial reports of the company and hence would have affects on the financial position of the company. Thus, it must be reported.

So, we saw that why a public accountant should must report of any fraud being done.

ekkarill92 answered 2 years ago
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