5-2: ZZZZ Best 1. I think that auditors should be held liable for failing to discover fraud. There are many ways the fraud could have been discovered over the years if the auditors performed an objective audit that followed rules and regulations. It is an auditor’s obligation to perform an audit with objectivity, skepticism, independence, and objectivity. Ernst & Whinney failed to meet these criteria. The auditors did not follow professional skepticism because when Minkow asked them to sign a confidentiality agreement to not follow up with any contractors, insurance companies, or building owners. This is not something to simply accept from Minkow. Ernst clearly did not perform a thorough audit and did not perform the necessary tests for reasonableness. 2. Ernst and Whinney should have seen a red flag from the start because there was an unreasonable growth in his company and he lived an extremely extravagant lifestyle. Minkow also had problems meeting his loan debt and there were many inconsistencies in ZZZZ invoices. I think that the relationship between Ernst and ZZZZ did influence the risk assessment and the work done in the audit. Because Ernst did not want to lose ZZZZ as its biggest client, the work was not done objectively. There was a bias because Ernst wanted to keep the “wiz” of wall street as a client. It created a good reputation for the audit firm. Because of this, a lot of their audit work that had to be verified. The auditors were not being professionally skeptical. 3. In one year sales and cost of goods sold increase about three times as much. The auditors should have questioned this rapid increase. Also, the amount of cash and accounts receivable do not add up to the amount after cost of goods sold reduces sales. There should be more cash received from sales. After costs of goods sold, the company should have about 2 million dollar