Page 55 - U.S. FOREIGN CORRUPT PRACTICES ACT

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

Accounting Principles (U.S. GAAP). These accounting by the PCAOB when they perform an audit of a
principles are among the most comprehensive in public company. The audit standards govern, for
the world. U.S. GAAP requires an accounting of all example, the auditor’s responsibility concerning
assets, liabilities, revenue, and expenses as well as material errors, irregularities, or illegal acts by a
extensive disclosures concerning the company’s client and its officers, directors, and employees.

operations and financial condition. A company’s Additionally, the auditor has a responsibility to
financial statements should be complete and fairly obtain an understanding of an entity’s internal
represent the company’s financial condition. 279 controls over financial reporting as part of its audit
Thus, under U.S. GAAP, any payments to foreign and must communicate all significant deficiencies
government officials must be properly accounted and material weaknesses identified during the
for in a company’s books, records, and financial audit to management and the audit committee. 280

statements. Under Section 10A of the Exchange Act,
U.S. laws, including SEC Rules, require issuers independent auditors who discover an illegal
to undergo an annual external audit of their act, such as the payment of bribes to domestic
financial statements and to make those audited or foreign government officials, have certain
financial statements available to the public by obligations in connection with their audits of public

filing them with SEC. SEC Rules and the rules and companies. 281 Generally, Section 10A requires
standards issued by the Public Company Accounting auditors who become aware of illegal acts to report
Oversight Board (PCAOB) under SEC oversight, such acts to appropriate levels within the company
require external auditors to be independent of the and, if the company fails to take appropriate action,
companies that they audit. Independent auditors to notify SEC.
must comply with the rules and standards set forth

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