X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

In December 2000 an article was written for this column which addressed the professional liability risks for auditors and the lawyers who are asked to report to auditors on litigation that had a material impact on the financial statements subject to audit.[1] In such contexts lawyers, restrained by applicable evidentiary privileges and the client confidentiality obligation, cannot always effectively inform the auditor. Even where the lawyers’ reports are both consistent with professional standards and not affected by privilege or confidentiality obligations, the auditor does not generally review with counsel prior to the publication of the financial statements the accounting determinations that have significant legal implications and the footnote disclosures. Audit failure in this context, therefore, can be more effectively prevented when such a pre-release review by the lawyer handling or managing the litigation does take place. Enron’s professional intersection, while not identical, is quite similar in that the audit failure resulted from the ineffective coordination and focus of legal and auditing expertise. The accounting treatment of certain transactions and relationships that had significant legal implications and the attendant disclosures were, in the last analysis, ultimately left to the auditor without the benefit of an independent legal determination and review. By understanding the material risks of this professional intersection in the audit process, we can here, too, take the right path to reform.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at customercare@alm.com

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2019 ALM Media Properties, LLC. All Rights Reserved.