As part of its fraud prevention program, the American Institute of CPAs has expanded its portfolio of resources for audit committees with new guides on understanding management override of internal controls and issues related to whistleblowers.
The free guides, "Management Override of Internal Controls: The Achilles' Heel of Fraud Prevention - The Audit Committee and Oversight of Financial Reporting," and "Anonymous Submission of Suspected Wrongdoing (Whistleblowers) - Issues for Audit Committees to Consider," are available on the Audit Committee Effectiveness Center page of the AICPA Web site at
The guidance outlines specific steps that audit committees can take to address the risk of management overriding established internal safeguards. "Management Override of Internal Controls" identifies six key actions that the audit committee should consider: maintaining skepticism; strengthening committee understanding of the business; brainstorming to identify fraud risks; using the code of conduct to assess financial reporting culture; ensuring that the entity cultivates a vigorous whistleblower program; and developing a broad information and feedback network.
"All audit committees, even those not covered by the Sarbanes-Oxley Act of 2002, should seriously consider establishing a whistleblower hotline," noted AICPA vice president John Morrow. "It's the No. 1 method for catching fraud at the management level."
