SOX Lite? SAS 99, Legal Liability and Risk Management

Gary Zeune, top speaker on white-collar crime issues, gives a primer on fraud alertness, detection and how to proceed if fraud appears to be a legitimate possibility. One reason for his concern, SAS 99, imposes many requirements on private-held businesses and state and local governments that Sarbanes-Oxley imposed on publicly-held major corporations. Among the steps in his 17-step action plan are: make sure that audit program is clearly adjusted for SAS 99, consider added use of surprise audit procedures, make sure to perform EVERY procedure which "should" be performed, GAAP and GAAS compliance do not make an audit lawsuit-proof, the learning curve on SAS 99 is steep, ALL management frauds including those under $100 are material, check marketing materials to assure that the perception of independence is not compromised by those materials, watch out for management overrides even for companies with good internal control and make sure that EVERY member of the team understands the goal of the audit and the importance of the antifraud provisions of SAS 99.

Zeune has done an important service not only for auditors but for auditing teachers with this article. Clearly, internal control and fraud detection and prevention have become even more important than before.