...Brian Finley Auditing Case 3-1 1. What alternatives are available? a. One alternative is that Brent could lie about doing his share of the audits. He could ‘pretend’ to forget a section of his duties in order to shorten up his work load and finish under the budget line. That is a good idea because he would spend more time with his wife and make her happier and also make the firm happy when looking at the budget. It is bad, however, because it would be lying to the client and also be unethical in the accounting rules. He may be found out too, and that may cause his future promotions to be delayed. b. He could also do all of his work and go in over budget. That is an honest way to go. It measures up to accounting principles. The cons are that no one will be happy at the end. His wife will still be mad about his time out of the house, and the firm will be mad since it is over budget and could delay his future success with the company. c. He could also eat the time so all of the work done is under budget. It is an unethical way to go but everyone will be happy at the end of the day. His boss would see the 35 hours completed and client would have the audit finished. But he is putting in all of those hours and may not get paid extra and he would still spend too much time away from his wife. d. He could also tell his boss ‘NO’. He is paid to work 40 hours a week and refuses to work anymore because he must invest in his personal life as well. His...
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...Shane Connolly Journal Article ACT 301 December 17, 2014 Is The Sarbanes-Oxley Act Working? This article written by Stephen D. Willits and Curtis Nicholls was printed in the CPA journal in April of this year. To give a brief history of SOX after the corporate fraud in the early 2000’s the SEC felt pressure to respond. Their response to the fraud committed my giant corporations such as Enron and WorldCom was the Sarbanes-Oxley Act. The main point of SOX was to try to limit or ideally eliminate corporate fraud by cracking down on self-regulating audit. The answer as to whether SOX is working or not is not as simple as yes or no. Some say that the scope of SOX was too wide while others maintain that it did not go far enough. The basis for the success of SOX comes down to cost versus benefit. Section 404 of SOX seems to have drawn the greatest criticism. Section 404 states that companies must issue reports concerning the internal control structure and the procedures for financial reporting. The purpose of this section was assessing the internal control and procedures of any company. The problem was the cost. Shortly after SOX was enacted companies (depending on size) report spending between 4 and 10 million dollars in order to comply with section 404. This number was expected to decrease as companies adjusted to the new laws; however there have been conflicting reports as to whether that has come to fruition. In respond to the political pressure the SEC was facing regarding...
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...Page 4 CSR Problem within the Barings Bank----------------------------- Page 5 FIVE Acts to Prevented Leeson from Destroying the Bank---- Page 7 Why SOX not Prevent the Fraud------------------------------------ Page 9 How monitor the ethical standard----------------------------------- Page 10 Conclusion---------------------------------------------------------------- Page 11 Reference----------------------------------------------------------------- Page 12 Executive Summary This report is through the case analysis about the collapse of Baring Bank, to talk about how the corporate social responsibility influences a company. Through the related CSR problems in Baring bank and trying to find what matters that the organization lack of. In addition to know more about how CSR effect the global business environment, depends on the Sarbanes-Oxley Act, the report talk about the five acts can possibly prevented Leeson to destroy the company. And also discuss why the SOX act is not effective which lead to the Madoff investment scandal and could not prevent the 2008-2009 financial melt down using the ethical decision making process. \ Introduction Barings Bank was the oldest merchant bank in London until its collapse in 1995 after one of the bank's employees, Nick Leeson, lost £827 million ($1.3 billion) due to speculative...
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...as follows: 1) Time management 2) Missing level 3 of the competency and jumping directly to level 4 3) Missing the competencies to be found in the exhibits in the case questions. Another concern is when students are writing both PA1 and PA2 at the same time. It is critical that those students “switch hats” from being a public practitioner in PA1 to a comptroller in PA2. And for those writing only one exam, make sure you write from the correct perspective. Consider the following for each case: 1) Type of communication (memo, letter or report) 2) Who is writing 3) To whom the case is being written to 4) The time frame. a. ie when in the audit: beginning, middle, end; there is no point writing about issues at beginning of audit if the audit is over and there is a draft audit report b. ie regarding purchase or sale of property: has the decision already been made to buy the property (shares or assets) or not; and if so, has the financing been decided. Or maybe there is an issue such as in Feed & Grow with the auditor owning shares of company to be consolidated with client; the extra shares to result in >50% ownership have not yet been bought so it is next year’s issue. The issue must still be addressed but the recommendation might be to consider the issue further. Not all issues have to be answered today; just that they must be addressed. The recommendation can be to explore the issue further etc. It is key to use subheadings in your...
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...Solving Ethical Dilemmas August 23, 2012 University of Phoenix Acc/260 After reading this case on ethical dilemmas I would say the ethical dilemma that Dan is facing is whether or not he should do the audit he has been ask to do by his boss in an ethical and responsible manner, or if he should take no regard to the ethical codes and to follow the instructions that his boss has given him. A little background on Dan and what has lead him to have such a big dilemma. Dan works for Baker Greenleaf which is one of the Big Eight Firms, Dan is one of the many staff accountants that work for the firm. Dan has been asked to work on a big case which his boss has put his best people on, and if Dan is successful in working on this case it could lead to a promotion for him. The project senior Oliver Freeman has assigned Dan to audit a wholly-owned real estate subsidiary, when Mr. Freeman gave the assignment to Dan he told Dan “ I want you to solve the problems we are having with this sub and come out with a clean opinion.” Now what Mr. Freeman means by a “clean opinion” is he wants confirmation that the clients statements are presented fairly, Mr. Freeman also wants this done in one month. Dan was also assigned someone to help him with this case, his name is Gene Doherty, and Gene is someone that has worked with Mr. Freeman before on this same clients account. Gene also told Dan that Mr. Freeman was a strict authoritarian and he was also not a very flexible man. After looking over the...
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...Mandatory Audit Rotation Introduction In 2002, Enron became the largest case of fraud in history. It caused it investors to lose sixty billion dollars, two million two hundred thousand in pension plans, and five thousand six hundred jobs (Enron Sentences Will Be Tied to Investor Losses). This all could have been avoided if public companies were forced to changed independent auditors every five years. Throughout this paper, I will be talking about mandatory audit rotation and why I think it is a great idea. First I will talk about the Sarbanes Oxley act and what it requires when it comes to partner rotation. It is important to know what the current rules and requirements are before we discuss how they should be changed. The next item I will discuss is auditor independence and how it is affected by audit rotation. After I talk about the current rules and independence, I will discuss the advantages and disadvantages of mandatory audit rotation. Sarbanes-Oxley Act In 2002, President George W. Bush signed the Sarbanes-Oxley Act of 2002 to protect investors from the possibility of fraudulent activities by corporations. This act was aimed to improve financial statements of corporations and prevent fraud. In section 203 of the Sarbanes-Oxley Act, it gives the requirements of partner rotation. “The new rules provide that an accounting firm will not be independent if either the lead audit partner or the concurring partner performs audit services for more than five consecutive...
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...are appreciated! 16-38 For this question, please state either that no report should be issued or what specific type of report should be issued (such as compilation, review, audit, etc.) and what that report will be on, such as on the financial statements, on internal controls, etc. You should also include if any disclaimers should also be issued. a. A compilation report should be issued that describes what the compilation engagement was and an opinion. b. A review report should be issued and it should describe the review and give an opinion. c. No report is needed d. An audit report should be issued describing the audit and an opinion. The internal controls should be the focus of the report. e. An audit report should be issued. Review report should also be issued for the quarterly statements since they are associated with that as well. 16-40 In this example, the audit report given has at least 20 errors. To earn full credit, you need to identify at least 10 of them. You should compare this report to the examples in the book, looking closely at any differences, even if they seem insignificant. I’ll give you an example, and feel free to use this one as a freebie in your own answers. The date at the bottom of this audit report is the balance sheet date. The date that should be used on the audit report is the date the report is given to the client. (See what I...
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...the corporate accountability and the financial reports they convey to the public and investors. There have been a number of accounting fraud sandals in the last decade, some of these companies include; Enron 2001, Worldcom 2002, Tyco International 2002 and locally, Tom Peters Company 2008. As a result of these most recent accounting frauds, congress passed the Sarbanes-Oxley act in 2002. The Sarbanes-Oxley Act * Applies to publicly traded companies * Established the Public Company Accounting Oversight Board (PCAOB). The PCAOB is a private sector, nonprofit corporation that oversees the auditors of public companies. The PCAOB protects the interests of investors by helping ensure fair, independent audit reports. * Requires that external auditors report to an audit committee, rather than to an organization’s management. Prior to Sarbanes-Oxley, the external auditors often reported to the company’s upper management. * Requires that a company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO) certify all annual, or quarterly, reports filed by an organization.(Waybright & Kemp, 2010). The Sarbanes-Oxley Act places new legal constraints on executives and gives expanded Protections to...
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...introduced after major corporate and accounting scandals including the scandals of Enron, WorldCom etc so that the same kind of scandals do not repeat again. There are 11 titles on the act. Each title consists of several sections. The Securities and Exchange Commission needs to implement rulings on the requirements to comply with the law. These major elements are- 1. Public Company Accounting Oversight Board: This title establishes the Public Company Accounting Oversight Board. It provides specific processes and procedures for compliance audits, policies for control purposes. Basically it provides an oversight of public accounting firms that do auditing. 2. Auditor Independence: It provides standards for external auditor independence, so that conflicts of interest can be minimized. It also mentions the requirements for appointing new auditor and auditor reporting requirements. Auditing companies are prohibited from providing non-audit services (consulting) for the clients for whom they provide auditing services. 3. Corporate Responsibility: According to this title the senior executives must take responsibility for accuracy and integrity of their corporate financial reports, otherwise they will be held responsible. This title describes the responsibility of corporate managers, enumerates the limitations and penalties for non compliance. 4. Enhanced...
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...more marks you will score! common sense? I should say so! ๏ “But the pass rate percentage can be down in the low 30s. If the large majority of my contemporaries are employed by accounting / auditing rms, why is the pass rate so low? And what chance do I have - I have absolutely no auditing experience at all?” ‣ around 70% - 75% of your contemporaries are employed by audit rms. Yet there is a pass rate in the low 30s. Does this not tell you that, even if no non-auditors were to pass, the majority of those with auditing experience still fail? there have to be some underlying reasons for this! ‣ • I personally believe that there are a number of contributory factors including, in no particular sequence: • not reading the question carefully enough and therefore failing to address the question requirements knowing too much and therefore misallocating their time failing to write the obvious points - because they are so obvious reluctance on the part of non-natural-English-speaking students to write enough points when I was a student my own audit manager ( big 4 rm ) managed to fail the audit exam! For huge selection of free ACCA notes, lectures and articles please visit http://opentuition.com/ 1 ACCA Exam Technique Articles OpenTuition.com ‣ the solution? • • • • ‣ read the questions carefully and make sure you fully appreciate what the question is asking plan your answers re-read and ask yourself “If I write down in answer form what...
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...Audit Process Letter Laura Sferra ACC/546 November 23, 2015 Allen Foster Mrs. Susan Right Senior Partner Anderson, Olds, and Watershed 1 Shoe Street New York, NY. 90001 Dear Mrs. Right, Mr. Lancaster, President of Apollo Shoes, has expressed his satisfaction with the services that our firm offers and would like to continue with a full audit. Because our client does not want our firm to talk to the predecessor auditor, I recommend accepting a prospective engagement after I perform an investigation by gathering information about our client's reputation and background. Client acceptance and continuance procedures are the foundation of the risk assessment process (SAS No. 8). Upon acceptance of our client, I am confident that we will be able to move forward under the AICPA auditing standards to determine that the financial reporting framework is appropriate. My objective is to plan the audit so that it is conducted efficiently and effectively, in accordance with Generally Accepted Auditing Standards. I will take into consideration the preliminary planning activities such as the client acceptance, ethical position of our audit firm and our understanding of the entity and its environment, including its internal control, to develop an effective and efficient overall audit strategy that will appropriately respond to assessed risks. Our engagement letter, will include the timetable of fieldwork, the scope and duration of...
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...Marketing Audit A Marketing Audit is a comprehensive, systematic, periodic and independent examination of a company’s or business unit’s marketing environment, objectives, strategies and activities with a view to determine problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance. The purpose of a Marketing audit is to identify whether there are any working practices that could be more effective. There are essentially two types of Marketing audits in existence, which are, • Internal marketing audit • External marketing audit The timing of a marketing audit depends on the Company. In general, marketing audits are usually carried out every 6 months. Twice per financial year. The personnel likely to be involved with a Marketing audit are as follows, • The Owner / CEO • Marketing Director • Marketing Manager • The Chief Accountant • The Head of Finance Characteristic of a Marketing Audit The 4 main characteristics of a Marketing Audit are as follows, • It is broad rather than narrow in focus The term “marketing audit” should be reserved for a horizontal (or comprehensive) audit covering the company’s marketing environment, objectives, strategies, organization, and systems. In contrast a vertical (or in-depth) audit occurs...
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...books for Kanebo for five years. After this scandal was uncovered, the Japanese Financial Service Agency revised auditing standards, the CPA Law and the Financial Instruments and Exchange Law. The FSA also introduced the Internal Control Report and Audit and quarterly financial statement reviews. In addition, the CPAAOB was formed and was to become an independent regulator under the FSA. Further reforms include requiring auditors to rotate client teams every seven years, with a two year interval before they return. Another development was the Olympus Corp. fraud of 2011. Olympus Corp. admitted to hiding large securities losses by using payments to merger advisers and venture capital funds. The two auditing firms that were under investigation were KPMG ASZA and Ernst & Young ShinNihon. With each firm, there was a failure to obtain sufficient, competent evidence to support the auditors' opinion on the financial statements. Based on this scandal, the PCAOB was given more international freedom. The PCAOB and Japanese regulators reached an agreement that allows the two countries to carry out joint inspections of auditing firms in Japan and the US. As a result, the PCAOB conducts inspections of international firms that audit public companies...
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...Significant case, most leading case in lack of corporate governance * Holding royal’s bank account (not merely responsibility toward the stakeholder but the society) * Oldest merchant bank * A single handed activity by Nick Leeson caused the bank bankrupted Although Leeson is the one responsible for Barings’s bankrupt, however it’s not possible if other parties in the bank do their duties. Leeson only took advantage since others in the organisation not carrying out their tasks and lack of knowledge. Leeson used this to boost his ego. If each of the people in organisation do their jobs without compromising or lacking in somewhere, Leeson wont have chance to take advantage. Corporate Player Staff Internal monitor, internal auditor Gatekeepers like external auditor External bodies Shareholders How each of these people compromised their duties? Leaders: * Lack of knowledge, they did not know anything about the activities * They didn’t not change the management for the new business * Blindly depend on external people without proper test * Profit gained shared among management as bonuses, lead to further greed, monetary benefits * Hire Leeson who is only a bookkeeper * Employee incompetent people for the job * No monitoring, lessen is left independent to handle the stock market * No proper check when he asked for money, no due diligence test was done * Internal auditor External auditor * Blindly...
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...1. CASE SUMMARY Androids is an audit firm which provides audit and consulting services to their clients. Androids & Co started in 1913 when Arthur and Clarence, both from the audit firm of Price, bought out a small audit firm in Illinois to form Arthur, Clarence & Co, which became Androids & Co in 1918. Arthur Androids, who is the founder, headed the firm of Androids & Co until his death in 1945. He was a passionate supporter of high standards in the accounting industry. In 1945, Leonardo Sparky, who handled Androids at the founder’s death, continued this emphasis on honesty. For all these years, Android’s motto was “Think Straight, Talk Straight”. David Lawrence joined Androids twenty years ago and earned a salary of USD 700,000 per annum. David is Androids’ partner and auditor who are responsible in auditing Enronaa’s account since 1987. Enronaa is a client of Androids for the past 16 years. David is one of the Androids’ partners who are responsible to check on Enronaa’s account and to ensure that they fairly representing the state of the business. The issues arise when there are evidences suggesting that Androids assisted Enronaa to sort of increase reported returns of off-balance sheet activities by units called raptors. In addition, the second issue that arises in Enronaa is many off-book partnerships were not properly accounted for. From this issue, David stated that millions in debts and losses had to be reflected in Enronaa’s books. David also confessed...
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