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Forensic Accounting, Forensic Techniques, and Fraud Detection Copyrighted 2001 D. Larry Crumbley, ... - page 28 / 352

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© D.L. Crumbley

Sarbanes-Oxley Act of 2002

If you are going to be an auditor, you have to be an auditor, not an auditor and a consultant [Senator Jack Reed].

In order to be independent, an accounting firm should not

Audit ones own work.

Function as part of management or an employee.

Act as an advocate.

No limitations are placed upon accounting firms in providing non-audit services to public companies they do not audit or any private companies.

Audit services and non-audit services (e.g., tax) must be pre-approved by the audit committee, if not prohibited by the Act (before the non-audit service commences).

Auditor must report to the audit committee on a timely basis.

Cooling off period of one year for hiring an auditor if CEO and other senior officers worked for the auditor.

There is no requirement to rotate the auditors.

There is discussion of requiring a forensic audit irregularly. Harvey Pitt suggested this proposal.

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