Discussion:Audit Integrity Dilemma

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Discussion Forum Index --> Accounting Questions --> Audit Integrity Dilemma

Lrichards (talk|edits) said:

27 July 2013
I have a question about a dilemma about audit fieldwork. My boss reviews my internal audit fieldwork. When he does on site audits I review his. He was bragging to a group at lunch that he did an equipment audit from his car in the rain one evening last week. I know for a fact that you have to be within a few feet of the equipment to see serial number plates that are one or two inches square. You most certainly cannot identify the equipment from your car in the rain. I am getting ready to review and sign off on his work next week. It sounds like he pencil whipped the equipment audit, but I am not sure. What are my responsibilities in a situation like this? If I confront him of course he will retaliate, so I don't think I can do that. If I let it go its on my conscience.

Podolin (talk|edits) said:

27 July 2013
You have a true dilemma. You can't "let it go", in my opinion, even if it means he "retaliates". But, there may be ways to handle this. First, does the company have a private line for these type situations? Many large companies, especially public ones, do. Second, wouldn't the com[pany support you if he were to retaliate? It would be in their best interests to know about this incident; there may be more they'd want to know about your boss. And, is there a way to do this without having it come back to you? You say above that he bragged to "a group".

Be very sure of your facts, too. It might not be an over-reaction to discuss your plan of action with counsel - yours.

Podolin (talk|edits) said:

28 July 2013
Also, outside auditor relies to an extent on internal audit, so, if you have a relationship with a partner there, ...

Lrichards (talk|edits) said:

28 July 2013
Podolin - You bring up some very good things to consider. Basically, the company pays us to do work ethically, they deserve to know. Unfortunately we do not have a private reporting line. When I review this work of his next week I am going to see if the work papers disclose anything suspicious. I may just have to confront him and ask him how he could do this work from the car and see what he says.

PHIL MOODY (talk|edits) said:

29 July 2013
Looks to me like your getting all bent out of shape over something that may or may not be true. You said it was bragging. Before you get fired, how do you know he did not perform other acceptable procedures. In rural areas, I use to take spouse along to inventory heavy equipment on dealer lots, corn in silos.

I can guarantee you, being a hunter, that if the equipment plate was visable, I could read it from an auto. Ever hear of a spotting scope?

see my footnote #87b for corrections.

Lrichards (talk|edits) said:

30 July 2013
Well, getting bent out of shape is one way to look at it, albeit a very negative one. Turns out he claimed to have abandoned the rainy attempt, and got help the next day to id all the items in broad daylight. My intent was more to serve the organization correctly. The SN plate on this Ag equipment is roughly 2 by 3 inches, and at times is under the cab, near the frame, behind a bumper, and unless your scope could see through metal, I don't think you could of done it. But thanks, I appreciate the input.

Gplourde (talk|edits) said:

9 August 2013
One issue that your boss may not realize is that your firm's reputation is based on its audit integrity. It's called assurance for a reason. If he brags too much about shoddy or incomplete work, you run the risk of clients questioning the validity of any auditing done by your company or having a wobbler issue for a company your firm audited be classified as your firm's fault and going through litigation.

As an example, let's say that you have a company with an inventory fraud where they stack the boxes high near the door in the warehouse so it looks full. Now, your statistical sampling misses this warehouse because they have warehouses all over the country. However, when someone finds out about the fraud, if your company gains a reputation for shoddy work then some enterprising attorney will be quick to find some way to hold your firm responsible.

Thus, to make a short story long... if your boss continues bragging about things like this on a regular basis you may have to go over his head.

Gazoo (talk|edits) said:

21 August 2013
I agree with Gplourde. Loose lips sink ships.

I've seen a lot of big shots brag what they own at the 19th hole....only for them to come home after a vacation and find their house cleaned out by a golfer-burglar who happened to be sitting at the bar with them.

And the things the men say at the strip clubs is just unbelievable. What they won't say to woo a stripper. (I do not go to the clubs because of my ministerial status, I've just heard about it). Watch what you say at the strip clubs, gentlemen. A lot of these strippers have a boyfriend at the club slinking around and taking notes on what you say.

Tiger started going down the wrong fairway at the Vegas clubs....and he's never been the same (on the flip side, it does sound like he had a lot of fun which will make for good memories in the future).

I won't comment any further, other than to say: good advice on this thread.

Trillium (talk|edits) said:

22 August 2013
bumping back onto forum index

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