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Misrepresentation of Companies Funds

Auditors play a crucial role in verifying the accuracy of financial statements. Their work is governed by ethical standards under the Professional Code of Conduct of the American Institute of Certified Public Accountants (AICPA). This industry association, however, has limited powers to punish auditors who behave in an unprofessional or unethical manner. While having a CPA is necessary for membership, not all CPAs are members of AICPA, so the organization does not have the ability to strip somebody of their CPA. I feel that it or another body should have this power. This would be the auditing equivalent of is disbarring a lawyer, and would provide significant motivation for auditors to behave ethically.

Legally, auditors are bound to certain terms, specifically under Sarbanes-Oxley (SOX). Auditors are now subject to oversight from the Public Company Accounting Oversight Board (PCAOB), which was created under SOX. This means that auditing firms are subject to oversight. There is significant risk; therefore, that auditor behavior could destroy the entire auditing firm (as happened at Arthur Andersen). Thus, removal from the auditing position at the company is likely insufficient punishment for transgression. The auditing firm should have the right to file suit against its