Summary
As I read the referred article about a lawyer who was at the top of his profession being sentenced to 20 years for fraud and of other cases like Madoff et. all (including the cases over the last ten years) I think this is the season for frauds. Major frauds are being announced and uncovered in innovative ways including in two major cases by public announcement (Madoff and Satyam). In this analysis I take a look at how this "season for fraud" is going to impact audit quality, audit standards and also forensic accounting.
Analysis
1. Forensic accounting is where the future of audit lies.
2. As one looks at the manner in which ratings of securities have been fudged by rating agencies and how corporate results have been manipulated, then forensic audit and accounting is the only way to go to ensure proper and timely financial results.
3. Also cases like Madoff, Satyam and now Marc S. Dreier simply point to people at the helm not being above board in a number of cases.
4. One can expect audit standards both in the US and internationally through the IFAC to undergo a major metamorphosis. This would probably be through more onerous responsibilities being cast on the profession.
5. In summary I would say look out for major changes in audit standards with greater emphasis on indepth verification by auditors.
