The external audit

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The Report of Independent Registered Public Accounting Firm for Krispy Kreme Doughnuts, Inc.  appears on page 83 in the 2014 Annual report.  After the independent CPA firm performs an audit a sample of the transactions and internal controls that support preparation of the financial statements the audit report will express an opinion.  An unqualified opinion was expressed for the 2014 Krispy Kreme Doughnuts, Inc. consolidated financial statements.

 

The following are the types of audit opinions that may be expressed; unqualified, qualified, adverse, and disclaimer of opinion.    The unqualified opinion is the best opinion for the corporation to achieve.  “The unqualified opinion states that the financial statements present fairly in all material respects the financial position, results of operations, and statements of cash flows in conformity with generally accepted accounting principles” (Public Accounting Oversight Board, 2015).

 

Page 5 of the cited source below provides definitions for the qualified and other opinions mentioned above.

The Public Company Accounting Oversight Board is a nonprofit organization by the Sarbanes- Oxley Act to oversee audits and protect the interests of investors and the public.

 

After the Enron, WorldCom, and other corporate scandals, the Sarbanes-Oxley Act of 2002 was signed on July 30, 2002 by President W. Bush.    Enron and other companies were forced to declare bankruptcy and massive accounting irregularities were discovered.  The Act addresses corporate responsibility, the reporting of internal controls, auditor independence, and regulation of auditors.

 

Class – Any ideas why the accounting irregularities at Enron were not disclosed by the external audit firm, Arthur Anderson?  Do you think that your current or former employer organization has implemented the procedures and controls to comply with the Act?     Remember to include an explanation to support your response.