Question

Government Audits & Fraud Reporting For discussion: During an audit of a state or local government, why would an independent public accountant consider it their responsibility to report suspected fraud to any person(s) or entity?

Answer 1

Why reporting fraud considered responsibility of accountant

An Accountant has some ethical code of conduct in performance of his/her task. Being in a responsible position as an agent of stakeholders of an organisation. Here stakeholders are the general public as Government being the organisation. So accountants has to adhere to these procedures and conduct while having the audit. At the same time on this duty accountant should not have any self interest to misstate or misrepresent financial data as owners will be effected.

It is accountants in an organisation who advise management and setup controls in the organisation.Controls means both financial and operational control which hereby help to avoid error and fraud. Any false in the system should be regularly reviewed and should reported to corresponding government department.

Accounting Information System where all financial data of an organisation is processed this is made by accounting experts any loop hole in the system increase threat of fraud. Accountants has a great role in detection and fight against financial fraud and crimes than will effect wider community.

Eventhough There exist a confidentiality agreement with employer at times with fraud occurs accountants need to be proactive and be a whistle blower to do good to the wider community that is the stakeholder. Accountants has a social responsibility to detect and report fraud to public.

While Conductiong an audit in Government Department auditor will have to keep professional skepticism, should always be alert of occurace of fraud. Don't overrelay on client here officals of government department ask for explanations if any suspected transactions or accounts are found from responsible offical.

other responsibility of accountant regarding fraud are, if auditor spot any fraud while in audit has to communicate with the appropriate level of management on a timely basis. Look for if any legal advice is required for an instance with independent legal advisor.