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First responders are the team that comes into action when a crisis situation is unfolding or is expected to take place. Emergency medical personnel are an outstanding example of first responders as they are called into action to stabilize accident victims and transport them to trauma experts. Police departments have emergency response teams that are called into action when a violent crime goes beyond the abilities of local police who are the first responders. In both cases, the job of the first responders is to identify the victims, contain the situation, and prevent further loss until professional specialists become involved in the crisis. First responders have a role at the beginning of a crisis situation that ends when experts with higher levels of skill can be called to remediate the situation. First responders generously extend their services to third parties and society receives the benefits. It may seem strange to consider auditors as first responders, but when a financial fraud or other illegal act is suspected of having occurred during an audit, third parties expect the client's auditors to act as first responders. As first responders, auditors must take the appropriate actions to identify the fraud, stabilize the situation, and prevent continuing resource losses for their client. First responders do not attempt to shy away from their responsibilities to third parties.
When suspected illegal acts are thought to have occurred, it may be necessary for auditors to become involved in a Section 10A investigation under Securities and Exchange Commission (SEC) rules. Further, auditors have a role under practice guidelines to be alert to the occurrence of financial fraud and other illegal acts in the performance of an audit. As the majority of frauds are digitally based, any effort to stabilize and prevent further client losses involves good electronic documentation collection procedures[1] . Digital documents are considered to be any business record or document that is in an electronic format and digital forensics consists of the techniques used to collect and identify such electronic information.
This paper compares Section 10A legislation under the US Securities and Exchange Acts, requiring auditors to become first responders to illegal acts, with the perspectives found in professional practice guidelines where the auditor's role as a first responder is more muted....