The Big 5 Audit Organizations
Running head: THE BIG 5 AUDIT ORGANIZATIONS:
The Big 5 Audit Organizations:
AICPA 3 General Standards of GASS & the Missing 4th Critical General Standard
Martin D. Walden B.S., C.P.A.
Troy University
Advanced Auditing
PhD. Gaddis
June 19, 2008
Abstract
The big four private CPA firms and the GAO compromise the big 5 Audit Organizations and follow GAAS (GAGAS for the GAO). The AICPA has identified 10 GAAS standards. The first three Standards are called General Standards and are listed below.
1. The auditor must have adequate training and proficiency to perform the audit.
2. The auditor must maintain independence in mental attitude in all matters relating to the audit.
3. The auditor must exercise due professional care in the performance of the audit and the preparation of the report.
A fourth Standard is missing and results in the organizations corruptness, deceptive and often illegal acts, often with no consequences. This paper will enlighten readers to the need of a 4th General Standard!
Is there a missing General Standard for Auditing? Who are the Big 5 Audit organizations and do they have integrity, ethics, and honesty? This paper will discuss some activities the largest Auditing firms have been associated with over the past seven years. Is their activity learned behavior from our countries leaders? Is corruption inherent in the industry? Is independence the 2nd general standard a reality or merely an illusion? These are question we will review at the end of this paper and you may draw your own conclusions based on the evidence presented.
The Big 5 audit organizations include the following:
KPMG (KlynveldPeteMarwickGoerdeler)
PriceWaterhouseCoopers
Ernst& Young LLP
Deloitte & Touche
GAO (U.S. Government Accountability Office)
In 2006 in its last year-end media advisory, the GAO plainly states that
“For the ninth straight year, the U.S. Government Accountability Office (GAO) is unable
The Big 5 Audit Organizations:
AICPA 3 General Standards of GASS & the Missing 4th Critical General Standard
Martin D. Walden B.S., C.P.A.
Troy University
Advanced Auditing
PhD. Gaddis
June 19, 2008
Abstract
The big four private CPA firms and the GAO compromise the big 5 Audit Organizations and follow GAAS (GAGAS for the GAO). The AICPA has identified 10 GAAS standards. The first three Standards are called General Standards and are listed below.
1. The auditor must have adequate training and proficiency to perform the audit.
2. The auditor must maintain independence in mental attitude in all matters relating to the audit.
3. The auditor must exercise due professional care in the performance of the audit and the preparation of the report.
A fourth Standard is missing and results in the organizations corruptness, deceptive and often illegal acts, often with no consequences. This paper will enlighten readers to the need of a 4th General Standard!
Is there a missing General Standard for Auditing? Who are the Big 5 Audit organizations and do they have integrity, ethics, and honesty? This paper will discuss some activities the largest Auditing firms have been associated with over the past seven years. Is their activity learned behavior from our countries leaders? Is corruption inherent in the industry? Is independence the 2nd general standard a reality or merely an illusion? These are question we will review at the end of this paper and you may draw your own conclusions based on the evidence presented.
The Big 5 audit organizations include the following:
KPMG (KlynveldPeteMarwickGoerdeler)
PriceWaterhouseCoopers
Ernst& Young LLP
Deloitte & Touche
GAO (U.S. Government Accountability Office)
In 2006 in its last year-end media advisory, the GAO plainly states that
“For the ninth straight year, the U.S. Government Accountability Office (GAO) is unable
Bibliography: Ciesielski, J. (2007, August 28th). Schumer To Big Four: Up To You To Fix The Subprime Problem . Retrieved June 17th, 2008, from The AAO Weblog: http://www.accountingobserver.com/PublicBlog/tabid/54/BlogDate/2007-08-31/Default.aspx Commisssion, U Dalal, S. (2003, June 9th). Lobying Against the Big Four. Retrieved June 18th, 2008, from http://www.financialexpress.com/news/Lobbying-Against-The-Big-Four/80437/0 Deloitte pays $50 million in SEC settlement over Adelphia audit DiLorenzo, T. J. (April, 2002). The ree Market. Retrieved June 18th, 2008, from The Mises Institute monthly: http://mises.org/freemarket_detail.aspx?control=395 Ex-consultant pleads guilty in KPMG tax fraud case NEWS, F. (2008). FOX News Documentary Shows Congressmen Sent Millions in Earmarks to Their Own Families. FOX NEWS. Office, U. G. (2008, April). The Nation’s Long-Term Fiscal Outlook. Retrieved April 2008, from United States Government Accountability Office: http://www.gao.gov/new.items/d08783r.pdf Taub, S Taub, S. (2004, October 21st). Today in Finance for October 21, 2004. Retrieved June 17th, 2008, from CFO.com: http://www.cfo.com/article.cfm/3308746?f=related Weiss, M