Academic journal article Journal of Accountancy

Financial Fraud Detection Act Introduced

Academic journal article Journal of Accountancy

Financial Fraud Detection Act Introduced

Article excerpt

The Financial Fraud Detection and Disclosure Act (HR 4313) was introduced in the House by Congressman Ron Wyden (D-Oreg.). The bill, among other provisions, would require auditors to report to the Securities and Exchange Commission any fraud not promptly corrected or reported by management.

HR 4313 would require the SEC to prescribe methods to be used by auditors to detect and report illegal acts, identify related party transactions and evaluate a business entity's ability to continue as a going concern.

The bill also contains a provision intended to provide a safe harbor limiting auditors' liability for reporting illegal acts. The safe harbor would end for fiscal years beginning on or after January 1, 1996.

Wyden calls the proposed legislation "an effort to bring accountants back to the first line of defense against cooked books and other rip-offs in publicly traded companies." House Telecommunications and Finance Subcommittee Chairman Edward Markey (D-Mass.) and Energy and Commerce Committee Chairman John Dingell (D-Mich. …

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