Independent auditors’ responsibilities for violations of the anti-bribery provisions of the Foreign Corrupt Practices Act

• In Event: Professional Issues Dealing with Fraud

Abstract

The Foreign Corrupt Practices Act (‘‘FCPA’’) is a critical statute in the fight against corporate corruption and its enforcement is a priority for the Department of Justice (‘‘DOJ’’) and the Securities and Exchange Commission (‘‘SEC’’). The FCPA’s anti-bribery provisions prohibit the payment of money or anything of value to foreign government officials to influence an act or decision or to secure any improper advantage to obtain or retain business. Independent auditors are not immune from FCPA risk. As this article explains, the payment of a bribe to a foreign government official is an illegal act that triggers numerous responsibilities for auditors under the securities laws and auditing standards. Auditors who fail to fulfill their professional obligations are subject to civil and criminal liability. This article concludes exhorting the Public Company Accounting Oversight Board (‘‘PCAOB’’) to issue new guidance and to revise existing standards in order to clarify the auditor’s responsibility with respect to illegal acts by clients, particularly those that have a direct and material effect on the financial statements.

Author

• Ricardo Colon, Lamar University