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United States Surgical Corporation

In: Business and Management

Submitted By AlexTheOne
Words 3583
Pages 15
United States Surgical Corporation

Prepared by

Alex Gonzalez & Daniella Trinchet

for

Professor C.E. Reese

in partial fulfillment of the requirements for

ACC 540 – Fraud Examination

School of Business / Graduate Studies

St. Thomas University

Miami Gardens, Fla.

Term A7 / Fall, 2014

October 24th, 2014

Table of Contents Issues 1 Facts 2 Analysis 5 Conclusions/Recommendation 12 References/Bibliography 14

Issues
1. What audit procedures that, if employed by Ernst & Whinney during the 1981 USSC audit, might have detected the overstatement of the leased and loaned assets account that resulted from the improper accounting for asset retirements?
2a. For USSC to extend the useful lives of several of its fixed assets and adopt a salvage value for many of these same assets for the first time, are these changes permissible under generally accepted accounting principles?
2b. Assuming these changes had a material effect on USSC’s financial condition and results of operations, how should the changes have been disclosed in the company’s financial statements?
2c. How should these changes have affected Ernst & Whinney’s 1981 audit opinion?
3a. What are the common sized financial statements for USSC for the period 1979-1981?
3b.What are the results of computed key liquidity, solvency, activity and profitability ratios for 1980 and 1981?
3c. What are the high risk financial statement items for the 1981 USSC audit?
4a. What factors in the auditor-client relationship create a power imbalance in favor of the client?
4b. What measures in the profession could have been taken to minimize the negative consequences of this power imbalance?
5a. In your opinion, did Hope satisfactorily investigate the possibility that there were additional suspicious tooling charges being paid and recorded by USSC?
5b. If not,…...

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