Welcome to Cpa

The Cpa Wrongdoings Page

Latest Cpa Wrongdoings News

cpa wrongdoings

Resolved Question: Is there a Generally Accepted Accounting Principle (GAAP) that mandates audits NOT be performed by INSIDERS?

The books being audited are for a Homeowners Association which is governed by state condominium law. The state condominium law mandates that audits be performed annually ACCORDING TO GAAP. One Homeowner is the Treasurer. They got another homeowner (who is not a CPA and may have little to no financial training) to do an "audit" on the Treasurer's books for the HOA. This would be similar to one employee of a company being called upon to audit the financial work of another employee managing the company's books, or an "internal audit". The company may or may not be called upon to have an external audit, depending on how they are organized as a private or public company. The HOA is not a public company but is governed by state law calling for audits according to GAAP. Isn't there a GAAP rule that requires audits to be performed by disinterested 3rd parties in an "arm's length transaction" so as to avoid insider collusion or dealing? The homeowner doing the "audit" in this situation has an incentive to not cite the Treasurer on any wrongdoing if the wrongdoing did not personally damage the "homeowner auditor". This is because if there was a lawsuit over the damages caused by the Treasurer's mistakes by incompetence, fraud or malfeasance,, there would have to be additional expenses to the Homeowners Association for counsel or even a deductible to be paid to the insurance company for the Officer's Liability Insurance under a claim to protect the HOA from further damages -- all of which the "auditing homeowner" would have to share in to pay for as a fellow homeowner. What does GAAP have to say about insiders performing audits when compliance with state regulations are at issue? Which rule of GAAP would this be? Extra points for reciting Chapter & Verse of the GAAP rule and any links to the specific website of reference. Thank you! more

Welcome to Cpa

Latest Cpa Wrongdoings News

cpa wrongdoings

Cpa Wrongdoings Questions asked

Resolved Question: Is there a Generally Accepted Accounting Principle (GAAP) that mandates audits NOT be performed by INSIDERS?

Top Cpa Wrongdoings Links

Menu