- LANGUAGE ENGlISH FOR .•.
AUDITING
A
~ is oot somethiog that people normally make a
song and dance about. but Enron, an all-singing and all-
dancing play, has been a huge success since its opening in
London last year. The musical is based on the real story of
the collapse of the Texas energy-trading firm Enron, in- The company's management had claimed it was mak-
ing a profit, but it had been hiding losses through complex
partnerships and off-balaoce-sheet deals.
Enron filed tor baokruotcy and its i.U..d.i1Q(, the firm Arthur
Andersen, was convicted of destroying documents relating to
the ID.lW1, Questions about auditor independence and con-
flicts of interest were asked. In 2000, for example, Andersen
received more trom Enron for consyltancy ($27m) than it did
for auditing ($25m), The cooyictjon was later reversed, but
the fi rm is unlikely ever to return to auditing.
QUIZ: Checking the records
Choose the correet answer for each question.
a) The term "audit" comes from the Lat in auditus, which
means "a(n) ___ _
I. hearing 2. calculat ion 3. examination
b) "The auditor is a watchdog, not a ___ ." (Lord Jus-
tice Lopes, 1896)- bloodhound 2. Rottweiler 3. poodle
c) In which type 01 audit might ISO 9001 certilicat ion be
used?- linancial audit 2. IT audit 3. quality audit
d) Which 01 the lollowing acronyms does not reler to li·
nancial reporting standards? - CPA 2, ISA 3. GAAP
e) EBllDA stands fQ( "Earnings before Interest, Taxes, Oe-
preciahon and _---,:-- Allowances 2. Amortization 3. Adiustments
Ans we rs on page 8782 Business Spotlight
Buch- und Rechnungsprüfungen erbringen den Nachweis
tür gesetzestreue Geschäftsabläule eines Unternehmens,
wie Ihnen STEPHANIE ASHFORD erläutert.An audit is a systematic review 01 a company's processes
er systems. lhe purpese 01 any audit is to make sure these
processes follow national or international rules, laws and stan-
dards. Non-financial audits can be carried out in areas such
as quality. security or energy efliciency. There are two types
of audit: ~ and external.
An internal audit is carried out by the firm's employees. In
an external financial audit, an outside auditor checks thatthe
financjal statements give a "fair presentatjon" of the compa-
ny's finances, and that they comply with recognized account-
ing standards. However. there is no agreed international def·
inition 01 "fair presentation", and the choice of accounting
rules leaves the concept open 10 interpretation.
The Earon scandal made clear the central rele that audit-
ing plays in the way lirms are managed. In 2002, the US
Sarbanes-Oxley ~ (SQX) established new accounling rules lor
Ijsted companjes and limiled the services, such as consultan·
cy, that auditors may provide to their crients. Further relorms
have been suggested, such as requiring cJients to use a new
auditor every few years. for greater auditor independence.
Critics of the reforms warn against overregulation and com-
plain of the high cost of complying. However, arecent report
on Lehman Brothers, the in vestment bank t hai collapsed in
2008, shows that accounting and auditing tricks were used
there, too. The events reminded many people 01 the Enron
drama - jusl as the play opened on Broadway this past April.atl [:.:I.:tl US
audit L~:drt t ----
auditing ['J:dlul))
auditor I'J:dIlJ]Gesetz
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RechnungsprO!ungswesen
Wlrtschaftsprü!ungsge-
seilschaft
tonsultaney Ik~n'SAh;,m~i) Beratuns
toconvitt nvictlon sb. (k;m'I/LIkJn'l/lkt) kJ'n) ~=~;=~,m~dn-:verurteilen Urteil
externat: · auditllk's!3:n'lI auße/betriebliche Re~islon
fair presentatiOlll.fcJ ,prCl.·n'lcIJ'1I] den tatsachllchen Verhalt·
file lor bankfupky I,fal>! fJ 'ba:l)krAptsi]
!inaneial s tatementf11ssen enlSQLechendes Bild
InSOlvenzantrag stellen
Bilanz, iihresabschluss
ii1ternal: -audit 1IO'I:I:n'll interne Re~ision
Ifal'na:nJ'1 ,~!CllmJntJ ~==~
' is led company I.hsud 'kAmr;mi] bOrsennotierte Firma
off·balance-sheet I,Df 'ba:'Jns Ji:11 außerbilanzlell
procen l'pr.'IUSCs] (Arbelt5"JAblaul
reverse Iri'1/3:~i tller: aufheben
song and dance: make a • about 51h. Viel Aufhebens von etw.
!.sno Jn 'du:n~l machenSTEPHANIE
programme at the Duale Hochschule Baden-WOrttem·
berg in Villingen·Schwennlngen. She speclallzes In
English lor Audltlng and International Tax Law.
Contact: [email protected]4/2010