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Section 1: Comprehensive Cases Section 3: Internal Control Issues ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 Enron Corporation Just for FEET, Inc Jamaica Water Properties Health Management, Inc The Leslie Fay Companies NextCard, Inc Lincoln Savings and Loan Association Crazy Eddie, Inc ZZZZ Best Company, Inc Gemstar-TV Guide International, Inc New Century Financial Corporation Madoff Securities General Technologies Group, Ltd.* AMRE* Star Technologies* United States Surgical Corporation* The Fund of Funds, Ltd.* ESM Government Securities, Inc.* Section 2: Audits of High-Risk Accounts ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 Jack Greenberg, Inc Golden Bear Golf, Inc Happiness Express, Inc CapitalBanc Corporation Dollar General Stores, Inc CBI Holding Company, Inc Campbell Soup Company Doughtie’s Foods, Inc.* Flight Transportation Corporation* J.B Hanaue & Co.* Giant Stores Corporation* Perry Drug Stores* SmarTalk Teleservices* Rocky Mount Undergarment Company, Inc.* 3.1 3.2 3.3 3.4 3.5 3.6 3.7 The Trolley Dodgers Howard Street Jewelers, Inc United Way of America Triton Energy Ltd Goodner Brothers, Inc Troberg Stores Saks Fifth Ave.* Section 4: Ethical Responsibilities of Accountants ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 Creve Couer Pizza, Inc F&C International, Inc Suzette Washington, Accounting Major Thomas Forehand, CPA Wiley Jackson, Accounting Major Arvel Smart, Accounting Major David Quinn, Tax Accountant Laurel Valley Estates* Oak Industries, Inc.* Jack Bass, Accounting Professor* Section 5: Ethical Responsibilities of Independent Auditors ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 Cardillo Travel Systems, Inc American International Group, Inc The North Face, Inc Waverly Holland, Audit Senior Koger Properties, Inc American Fuel & Supply Company, Inc PTL Club* Zaveral Boosalis* Mallon Resources Corporation* continued on back side Section 6: Professional Roles Section 8: International Cases ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ 6.1 6.2 6.3 6.4 6.5 6.6 6.7 Leigh Ann Walker, Staff Accountant Bill DeBurger, In-Charge Accountant David Myers, WorldCom Controller Tommy O’Connell, Audit Senior Avis Love, Staff Accountant Charles Tollison, Audit Manager Hamilton Wong, In-Charge Accountant Section 7: Professional Issues 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14 8.15 8.16 Livent, Inc Royal Ahold, N.V Kansayaku Registered Auditors, South Africa Zuan Yan Kaset Thai Sugar Company Australian Wheat Board OAO Gazprom Tata Finance Limited Institute of Chartered Accountants of India Societe Generale Shari’a Republic of the Sudan Mohamed Salem El-Hadad, Internal Auditor Tae Kwang Vina Baan Company N.V.* ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ ❍ 7.1 7.2 7.3 7.4 7.5 7.6 7.7 7.8 7.9 7.10 7.11 7.12 7.13 7.14 7.15 Would you like to include your own materials? Consider adding your own content such as a course syllabus, regional material, or sample exam Ligand Pharmaceuticals Stephen Gray, CPA Scott Fane, CPA Hopkins v Price Waterhouse Sarah Russell, Staff Accountant Bud Carriker, Audit Senior Fred Stern & Company, Inc (Ultramares) First Securities Company of Chicago (Hochfelder) CPA2Biz.com* Texas Drug Warehouse* Taxing Transactions* Stock Option Mania* HealthSouth Corporation* PricewaterhouseCoopers Securities* National Medical Transportation* * Cases drawn from previous editions of Knapp’s Contemporary Auditing that are not available in the 8th edition ❍ Yes, I plan to add additional materials ❍ No, I not wish to add additional materials ❍ I am not sure at this time if I would like to add additional materials Are you considering using these cases along with a South-Western Accounting text? ❍ No ❍ Yes ❍ If yes, which text? You will be able to create an original cover design that will include items such as your name and course title on the front You may even add your own school photo or logo Please fill out the information below so that we may contact you regarding the additional details of your inquiry Instructor Email C O M M E N T S : Department School City, State, Zip Phone Course Number and Title Projected Quantity Course Start Date Please submit your inquiry at least six weeks prior to the start of your course CONTEMPORARY AUDITING REAL ISSUES AND Eighth Edition CASES This page intentionally left blank CONTEMPORARY AUDITING REAL ISSUES AND CASES Eighth Edition Michael C Knapp University of Oklahoma Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom • United States Contemporary Auditing: Real Issues and Cases, Eighth Edition Michael C Knapp VP/Editorial Director: Jack W Calhoun Editor-in-Chief: Rob Dewey Acquisition Editor: Matt Filimonov © 2011, 2010 South-Western, a part of Cengage Learning ALL RIGHTS RESERVED No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means— graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution, information storage and retrieval systems, or in any other manner—except as may be permitted by the license terms herein Developmental Editor: Lauren Athmer Corrections Coordinator: Nancy Stamper Marketing Manager: Natalie King Production Manager: Jennifer Ziegler Senior Art Director: Stacy Jenkins Shirley Senior Permissions Acquisition Manager/ Image: Deanna Ettinger For product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, 1-800-354-9706 For permission to use material from this text or product, submit all requests online at cengage.com/permissions Further permissions questions can be emailed to permissionrequest@cengage.com Permissions Acquisition Manager/Text: Mardell Glinski Schultz Manufacturing Buyer: Doug Wilke Content Project Manager: Karunakaran Gunasekaran Library of Congress Control Number: 2009939709 ISBN 13: 978-0-538-46679-0 ISBN 10: 0-538-46679-0 Production House: Pre-PressPMG Internal Designer: Pre-PressPMG Cover Designer: c miller design Cover Image: iStock Photo South-Western 5191 Natorp Boulevard Mason, OH 45040 USA Cengage Learning is a leading provider of customized learning solutions with office locations around the globe, including Singapore, the United Kingdom, Australia, Mexico, Brazil, and Japan Locate your local office at: international.cengage.com/region Cengage Learning products are represented in Canada by Nelson Education, Ltd For your course and learning solutions, visit www.cengage.com Purchase any of our products at your local college store or at our preferred online store www.CengageBrain.com Printed in the United States of America 13 12 11 10 09 DEDICATION To my parents William Jackson Knapp and Orebel DeBurger Knapp To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF TOPICS BY CASE 554 The Leslie Fay Companies, Case 1.5, 63–74 Use of analytical procedures to identify high-risk financial statement items (Q) Financial information needed for audit planning decisions (Q) Non-financial information needed for audit planning decisions (Q) Control environment issues pertinent to independent audits (Q) Impact on auditor independence of litigation that names client and audit firm as co-defendants (Q) Audit implications of important changes and developing trends in a client’s industry Identifying “red flag” fraud risk factors and determining their impact on each phase of an audit NextCard, Inc., Case 1.6, 75–84 Auditors’ consideration of a client’s business model (Q) Identifying fraud risk factors posed by a client (Q) Objectives of audit workpapers (Q) Identifying violations of generally accepted auditing standards (Q) Responsibility of audit partners to serve as mentors for their subordinates (Q) Ethical responsibilities of an auditor who is instructed to violate professional standards by his or her superior (Q) Criminal liability of auditors Impact of Sarbanes-Oxley on accounting profession Lincoln Savings and Loan Association, Case 1.7, 85–98 10 11 12 13 Substance over form concept in accounting and its audit implications (Q) Threats to auditor independence (Q) Audit implications of related-party transactions (Q) Assessment of a client’s control environment (Q) Determination of when gains resulting from the disposition of assets can be recognized (Q) Identification of critical management assertions (Q) Audit evidence needed to support management assertions (Q) Identifying appropriate audit procedures to collect desired types of audit evidence (Q) Audit implications of close auditor-client personnel relationships (Q) Collegial responsibilities of auditors (Q) Auditors’ responsibility for detection of fraud (Q) Societal role of independent auditor SEC’s oversight role for the independent audit function Crazy Eddie, Inc., Case 1.8, 99–108 Use of financial ratios and other financial measures to identify high-risk financial statement items (Q) Audit procedures used to detect fraudulent misstatements of inventory, accounts payable, and sales (Q) Effect of important changes in a client’s industry on audit planning decisions (Q) Potential impact of “lowballing” on the quality of audit services (Q) Objective of year-end inventory cutoff tests (Q) Implications for the independent audit function of audit clients hiring former auditors (Q) Impact of collusion among client executives and employees on auditors’ ability to detect fraudulent misrepresentations in a client’s accounting records Importance of assessing the integrity of client management Incentive for companies to retain large audit firms when going public ZZZZ Best Company, Inc., Case 1.9, 109–122 10 Key differences between audit and review engagements (Q) Identification of critical management assertions (Q) Audit evidence needed to support management assertions (Q) Identifying appropriate audit procedures to collect desired types of audit evidence (Q) Limitations of audit evidence (Q) Predecessor-successor auditor communications (Q) Auditors’ responsibility for a client’s earnings press release (Q) Client-imposed restrictions on the scope of an audit (Q) Content of an audit engagement letter Overview of SEC’s 8-K auditor change disclosure rules To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF TOPICS BY CASE Gemstar-TV Guide International, Inc., Case 1.10, 123–134 Revenue recognition issues (Q) Factors or conditions commonly associated with “audit failures” (Q) Quality control measures used by audit firms (Q) Materiality judgments by auditors (Q) Ethical vs legal conduct (Q) Need to thoroughly investigate suspicious and/or unusual client transactions Limitations of client representations as audit evidence Auditors’ consideration of a client’s business model Role of SEC in financial reporting function New Century Financial Corporation, Case 1.11, 135–152 10 11 Advantages and disadvantages of having a heavy concentration of audit clients in one industry (Q) Quality control considerations for independent audits (Q) Section 404 of the Sarbanes-Oxley Act (Q) Auditors’ responsibility to discover and report significant deficiencies and material weaknesses in internal controls (Q) Auditing accounting estimates (Q) Violations of generally accepted auditing standards (Q) Mark-to-market rule for securities investments (Q) Potential impairment of auditor independence Impact of auditor-client conflicts on audit engagements Audit implications of accounting changes Auditor reviews of quarterly financial statements Madoff Securities, Case 1.12, 153–162 10 Audit procedures applied to client investments (Q) Nature and purpose of peer reviews (Q) Fraud triangle (Q) Common fraud risk factors (Q) Regulatory reforms necessary to improve auditors’ fraud detection capabilities (Q) Impairment of auditor independence Criminal liability faced by auditors Civil liability faced by auditors Societal role of independent audit function SEC’s regulatory mandate Jack Greenberg, Inc., Case 2.1, 165–172 Audit risk factors commonly posed by family-owned businesses (Q) Key audit objectives for inventory (Q) Quality of audit evidence yielded by internal versus external documents (Q) Nature and purpose of a walk-through audit procedure (Q) Auditors’ responsibility to inform client management of significant internal control weaknesses (Q) Whether or not auditors have a responsibility to insist that client management correct significant internal control deficiencies (Q) Segregation of duties concept and its impact on a client’s internal controls Need for auditors to thoroughly investigate suspicious transactions and circumstances Golden Bear Golf, Inc., Case 2.2, 173–180 Identifying relevant management assertions for individual financial statement items (Q) Choosing appropriate audit procedures to corroborate specific management assertions (Q) Meaning of the phrase “audit failure” (Q) Auditors’ responsibilities on “high-risk” audit engagements (Q) Nature and purpose of AICPA industry accounting and audit guides (Q) Changes in accounting estimates versus changes in accounting principles (Q) Proper application of the percentage-of-completion accounting method Need for auditors to thoroughly investigate suspicious transactions and circumstances Limitations of management representations as audit evidence 555 To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF TOPICS BY CASE 556 Happiness Express, Inc., Case 2.3, 181–188 Audit objectives associated with receivables confirmation procedures and year-end sales cutoff tests (Q) Selection of receivables for confirmation purposes (Q) Alternative audit procedures for receivables selected for confirmation (Q) Distinguishing between, and among, auditor negligence, recklessness, and fraud (Q) Auditor responsibility to investigate the possibility of illegal acts perpetrated by client executives (Q) Need for auditors to identify and consider impact of industry risk factors on a client’s financial health Need for auditors to document key changes in clients’ business practices Need for auditors to thoroughly investigate large and unusual year-end transactions CapitalBanc Corporation, Case 2.4, 189–192 Key management assertions related to cash (Q) Audit procedures applied to cash maintained on a client’s premises (Q) Supervision of staff accountants assigned to an audit engagement Internal auditor involvement in independent audits Need to follow up on suspicious client transactions and implausible client representations Dollar General Stores, Inc., Case 2.5, 193–196 Audit procedures useful for detecting improper accounting for PP&E transactions (Q) Fundamental accounting concepts relevant to PP&E transactions (Q) Conditions under which earnings management may be acceptable (Q) Ethical issues related to earnings management (Q) Accountability for improper accounting decisions within organizations (Q) CBI Holding Company, Inc., Case 2.6, 197–202 Key audit objectives for accounts payable (Q) Proper application of the search for unrecorded liabilities and reconciliation of year-end payables balances to vendor statements (Q) Differences and similarities in accounts payable and accounts receivable confirmation procedures (Q) Responsibility of auditors when they identify mistakes or other oversights they made in prior year audits (Q) Client requests to remove specific auditors from audit engagement team (Q) Considerations relevant to the acceptance of “high-risk” audit clients Need to identify critical audit risk factors and consider those factors in planning an audit engagement Need to thoroughly investigate suspicious transactions and circumstances identified during an audit Campbell Soup Company, Case 2.7, 203–210 Methods that corporate executives can use to “manage” earnings (Q) Ethical issues posed by earnings management by corporate executives (Q) Audit implications of earnings management by client executives (Q) Proper classification of key items in financial statements (Q) Audit procedures appropriate to uncover potential violations of the revenue recognition rule (Q) Distinguishing between auditor negligence and auditor recklessness (Q) Impact of the Private Securities Litigation Reform Act on auditor-related litigation (Q) Need for auditors to consider recent developments in a client’s industry when planning an audit The Trolley Dodgers, Case 3.1, 213–214 Tests of controls and substantive tests for the payroll transaction cycle (Q) Identifying internal control weaknesses in the payroll transaction cycle (Q) Audit procedures useful in detecting payroll fraud (Q) Control environment issues Howard Street Jewelers, Inc., Case 3.2, 215–216 Importance of internal controls for small retail businesses (Q) Responsibility of a small business’s CPA when alerted to potential control problems facing the client (Q) Measures CPAs can take to acquire clients (Q) Control environment issues To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF TOPICS BY CASE 557 United Way of America, Case 3.3, 217–222 Cost-effective internal controls to limit organizations’ exposure to theft losses (Q) Social responsibilities of CPA firms (Q) Client development activities for CPA firms (Q) Audit risk factors commonly posed by not-for-profit organizations (Q) Adoption of Sarbanes-Oxley internal control reforms by not-for-profit organizations Triton Energy Ltd., Case 3.4, 223–232 Factors that complicate audits of multinational companies (Q) Control activities intended to prevent violations of the Foreign Corrupt Practices Act (Q) Effectiveness of control activities (Q) Auditors’ responsibility to detect violations of the Foreign Corrupt Practices Act (Q) Impact on audit risk components of a client’s high-risk business strategies (Q) Accountants’ responsibility when they discover illegal acts perpetrated by their employer (Q) Auditors’ responsibility when they discover illegal acts perpetrated by a client (Q) Cultural differences in business practices and ethical issues posed by such differences for auditors and accountants (Q) SEC’s regulatory policies and procedures (Q) Goodner Brothers, Inc., Case 3.5, 233–240 Identifying internal control objectives for a wholesale business (Q) Identifying and remedying internal control weaknesses (Q) Importance of an effective control environment for a business (Q) Impact of management style and operating policies on an entity’s internal controls Role of internal auditors in an entity’s internal control process Need for auditors and client management to investigate suspicious transactions Troberg Stores, Case 3.6, 241–246 Scope of an entity’s internal control process (Q) Identifying control objectives and control activities for a retail business (Q) Need to segregate key functional responsibilities within a small business (Q) Compensating controls for a small business (Q) Ethical responsibilities of management when subordinates are suspected of engaging in theft or other illicit activities (Q) Consideration of relevant laws and other regulations when designing a business’s internal control process (Q) Control environment issues Creve Couer Pizza, Inc., Case 4.1, 249–252 CPAs serving as the moral conscience of small business clients (Q) Conflict between auditors’ responsibility to the public interest and the obligations imposed on them by the client confidentiality rule (Q) Resolution of ethical dilemmas by auditors (Q) Privileged communications between auditors and clients (Q) F&C International, Inc., Case 4.2, 253–256 Professional responsibilities of a business’s financial executives and high-ranking accountants (Q) Nature of the interaction between client management and independent auditors (Q) Ethical responsibilities of management when they suspect subordinates are engaging in theft or other illicit activities (Q) Need for an entity’s executives and financial managers to thoroughly investigate suspicious transactions and events coming to their attention (Q) Common methods used to misrepresent an entity’s reported profits SEC’s oversight role for the accounting and financial reporting domain Suzette Washington, Accounting Major, Case 4.3, 257–258 Resolution of ethical dilemma faced by an accounting student (Q) Ethical responsibilities of private accountants (Q) To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF TOPICS BY CASE 558 Responsibility of accountants to report unethical conduct by their colleagues (Q) Internal controls for a retail merchandiser (Q) Thomas Forehand, CPA, Case 4.4, 259–264 Professional standards relevant to client acceptance decisions (Q) Key considerations when deciding whether or not to accept a new client (Q) Parties affected by the resolution of ethical dilemmas facing accountants (Q) Responsibility of accountants to report criminal activity by others (Q) Strategies accountants can use to manage evolving ethical dilemmas (Q) Criminal liability of accountants Nature and implications of money laundering activities Wiley Jackson, Accounting Major, Case 4.5, 265–266 Resolution of ethical dilemma by an accounting student (Q) Disciplining of accountants who engage in unethical behavior (Q) Responsibility of accountants to report unethical conduct by their colleagues (Q) Arvel Smart, Accounting Major, Case 4.6, 267–268 Resolution of an ethical dilemma by an accounting student (Q) Ethical issues accounting majors may face when they have multiple job offers outstanding (Q) Internship opportunities available to accounting majors David Quinn, Tax Accountant, Case 4.7, 269–272 Nature and purpose of the client confidentiality rule (Q) Identifying violations of the client confidentiality rule (Q) Resolution of disputes with fellow professionals regarding ethical issues (Q) Responsibility of accountants to report unethical conduct by their colleagues (Q) Cardillo Travel Systems, Inc., Case 5.1, 275–280 10 Ethical dilemmas that accountants and auditors must resolve (Q) Parties affected by the resolution of ethical dilemmas facing accountants and auditors (Q) Auditors’ responsibilities when reviewing a client’s interim financial statements (Q) Importance of communication among members of an audit engagement team (Q) Key characteristics of audit evidence (Q) Evaluation of conflicting audit evidence by an auditor (Q) SEC’s 8-K auditor change disclosure rules (Q) Importance of auditors’ assessing the integrity of client management (Q) Methods for assessing integrity of client management (Q) Audit implications of significant auditor-client disputes American International Group, Inc., Case 5.2, 281–284 Ethical issues related to earnings management (Q) Nature of SAS No 50 reports by accounting firms (Q) Potential ethical issues related to SAS No 50 engagements (Q) Threats to auditor independence “Scope of services” issue facing audit firms Involvement of auditors in client accounting and financial reporting decisions The North Face, Inc., Case 5.3, 285–292 Proper treatment of proposed audit adjustments that have an immaterial effect on a client’s financial statements (Q) Preventing client from gaining access to materiality thresholds for an audit (Q) Identifying violations of the revenue recognition principle (Q) Principal objectives of audit workpapers (Q) Assessment of client management competence and its impact on the planning and performance of an audit (Q) Role of a concurring audit partner on an SEC engagement To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF TOPICS BY CASE 559 Waverly Holland, Audit Senior, Case 5.4, 293–298 Analysis and resolution of ethical dilemmas (Q) Collegial responsibilities of auditors (Q) Civil liability of current and former auditors Career development activities for CPAs Alternative career paths for accounting majors Koger Properties, Inc., Case 5.5, 299–302 Financial independence rules for auditors (Q) Material vs immaterial financial interests in audit clients (Q) Rationale for financial independence rules (Q) Audit practice implications of mergers between large accounting firms American Fuel & Supply Company, Inc., Case 5.6, 303–306 Auditors’ responsibilities regarding the “subsequent discovery of facts existing at audit report date” (Q) Client confidentiality rule (Q) Resolution of ethical dilemmas by the members of an audit engagement team (Q) Disagreements between members of an audit engagement team Leigh Ann Walker, Staff Accountant, Case 6.1, 309–310 Need for auditors to possess personal integrity (Q) Dealing with a lack of personal integrity on the part of staff accountants (Q) Nature of staff accountant’s work role and responsibilities Bill DeBurger, In-Charge Accountant, Case 6.2, 311–314 Nature of in-charge accountant’s work role and responsibilities (Q) Assimilation of audit evidence to reach an overall audit conclusion (Q) Resolution of conflict between members of an audit engagement team (Q) Performance of major audit assignments by relatively inexperienced auditors (Q) David Myers, WorldCom Controller, Case 6.3, 315–320 Ethical responsibilities of an accountant who is instructed to make false entries in his or her company’s accounting records by a superior (Q) Proper punishment of corporate accountants who intentionally misrepresent their employer’s financial health (Q) Role of regulatory authorities in policing the accounting and financial reporting domain (Q) Nature of a corporate controller’s work role and responsibilities Impact of involvement in an accounting and financial reporting fraud on an individual’s professional and personal life Tommy O’Connell, Audit Senior, Case 6.4, 321–324 Key differences between the professional roles of audit seniors and staff accountants (Q) Implications for independent audits of interpersonal conflicts between members of an audit engagement team (Q) Auditor’s responsibility when he or she suspects that a colleague is not completing assigned audit procedures (Q) Audit partner’s responsibility when a subordinate reports that a member of the audit engagement team is not completing assigned audit procedures (Q) Need for public accountants to achieve a proper balance between their personal and professional lives Impact of a lack of client cooperation on the performance of an audit Avis Love, Staff Accountant, Case 6.5, 325–328 Parties potentially affected by ethical dilemmas facing auditors (Q) Auditors’ ethical obligations to third-party financial statement users (Q) Auditors’ responsibility to document and investigate errors revealed by audit procedures (Q) Potential audit impact of personal relationships between auditors and client personnel (Q) Audit objectives of year-end cash receipts and sales cutoff tests (Q) Assessing materiality of financial statement errors (Q) To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF TOPICS BY CASE 560 Charles Tollison, Audit Manager, Case 6.6, 329–332 Requisite skills for promotion to partner in a major accounting firm (Q) Partner promotion criteria in large vs small accounting firms (Q) “Up or out” promotion policy of many accounting firms (Q) Need for public accountants to achieve a proper balance between their personal and professional lives Need for a public accountant to actively plan and manage his or her professional career Hamilton Wong, In-Charge Accountant, Case 6.7, 333–336 Ethical issues related to the underreporting of time worked by auditors (Q) Effect of underreporting time worked on quality of independent audits (Q) Measures needed to mitigate the underreporting of time worked (Q) Potentially dysfunctional effects of competitive promotion system within accounting firms on quality of independent audits (Q) Nature of in-charge accountant’s work role and responsibilities Ligand Pharmaceuticals, Case 7.1, 339–344 10 11 12 Engagement risk vs audit risk (Q) Factors influencing engagement risk (Q) Quality control issues for public accounting firms (Q) Application of the revenue recognition principle (Q) Subsequent discovery of material errors in audited financial statements (Q) Nature and purpose of PCAOB’s regulatory mandate (Q) Recent criticism of PCAOB (Q) Recommendations for improving effectiveness and efficiency of PCAOB (Q) Impact of Sarbanes-Oxley Act on independent audit function Nature of work role and responsibilities of an audit engagement partner Auditing sales returns Performance appraisal within accounting firms Stephen Gray, CPA, Case 7.2, 345–348 Purpose of professional codes of ethics (Q) Dynamic nature of professional codes of ethics (Q) Role of state boards of accountancy in regulating public accounting profession (Q) Circumstances under which CPAs can accept commissions (Q) Regulatory infrastructure of the public accounting profession (Q) Scott Fane, CPA, Case 7.3, 349–354 Impact of existing ethical rules on CPAs’ “commercial speech” (Q) Economic barriers of entry created by a profession’s code of ethics (Q) Impact on independent audit function of competitive bidding for audit engagements (Q) Impact of “lowballing” on independent audit function (Q) Advantages and disadvantages of professions being regulated at the state rather than federal level (Q) Impact of “creeping commercialization” on public accounting profession (Q) Practice development activities used by CPAs Regulatory infrastructure of the public accounting profession Hopkins v Price Waterhouse, Case 7.4, 355–362 Responsibility of public accounting firms to facilitate the career success of their female employees (Q) Informal employee networks within public accounting firms and related personnel and professional implications (Q) Nepotism rules of public accounting firms (Q) Acceptance of female and minority public accountants by clients (Q) Governmental regulation of private partnerships (Q) Partnership promotion process of large public accounting firms Requisite skills for promotion to partner in a major public accounting firm Sarah Russell, Staff Accountant, Case 7.5, 363–366 Interpersonal conflict between an employee and partner of a CPA firm (Q) Responsibility of public accountants to respect personal rights of colleagues (Q) To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF TOPICS BY CASE 561 Office managing partner’s responsibility to protect the personal rights of each office member (Q) Nature of staff accountant’s work role and responsibilities Bud Carriker, Audit Senior, Case 7.6, 367–372 Client management effort to influence staffing of audit engagement team (Q) Racial discrimination within the auditing discipline (Q) Responsibility of senior members of an audit practice office and/or audit engagement team to protect the civil rights of their subordinates (Q) Resolution of an ethical dilemma by an audit partner (Q) Issues relevant to staffing of audit engagement teams Fred Stern & Company, Inc (Ultramares), Case 7.7, 373–380 Implications for the public accounting profession of the apparent move by the courts to socialize investment losses (Q) Auditors’ legal exposure under the Securities Act of 1933 and the Securities Exchange Act of 1934 (Q) Auditors’ legal exposure under the common law versus the federal securities laws (Q) Evolution of the standard audit report form (Q) Evolution of standard financial statement package prepared by most companies (Q) Effect on audit planning decisions of the number and type of third-party financial statement users (Q) Purpose of an audit engagement letter (Q) Effect of audit engagement letters on auditors’ legal liability (Q) Joint and several liability of partners of public accounting firms for their subordinates’ malfeasance First Securities Company of Chicago (Hochfelder ), Case 7.8, 381–386 Responsibility of auditors to discover and disclose serious internal control deficiencies (Q) Audit implications of significant internal control deficiencies (Q) Key distinctions between and among negligence, gross negligence, and fraudulent conduct in an audit context (Q) Differences in auditors’ legal exposure under the Securities Act of 1933, the Securities Exchange Act of 1934, and the common law (Q) Objectives of the federal securities laws and the independent audit function Need for auditors to be skeptical even when the integrity of client management appears to be beyond reproach Livent, Inc., Case 8.1, 389–402 10 11 Identification of inherent risk factors (Q) Role and responsibilities of audit partners (Q) Client attitudes toward auditors (Q) Reports prepared by accounting firms on the application of accounting principles by non-audit clients (Q) Revenue recognition issues (Q) Responsibilities of corporate accounting personnel to investigate potential misrepresentations in their employer’s accounting records (Q) Potential conflict-of-interests faced by auditors who accept accounting positions with former clients (Q) Accounting firms’ responsibilities in due diligence investigations (Q) Forensic investigations by accounting firms Identifying “red flags” indicative of financial statement fraud Audit firms’ legal exposure under the Securities Exchange Act of 1934 Royal Ahold, N.V., Case 8.2, 403–418 Impact on a multinational corporation’s reported net income when applying accounting principles other than U.S GAAP (Q) U.S GAAP vs IFRS: impact on earnings quality (Q) Accounting for promotional allowances (Q) Factors that complicate audits of multinational corporations (Q) Components of the fraud triangle (Q) Identification of fraud risk factors (Q) Audit procedures effective in uncovering fraudulent accounting (Q) Nature of audit planning across different types of business operations (Q) Accounting for intercorporate investments To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com 562 SUMMARY OF TOPICS BY CASE 10 Conflict between and among the accounting profession’s international regulatory bodies 11 Need for major international accounting firms to enhance quality and consistency of their independent audits across the globe Kansayaku, Case 8.3, 419–428 Impact of macroeconomic variables on a nation’s independent audit function (Q) Impact of differing barriers to entry on the accounting professions of individual nations (Q) Advantages and disadvantages of an oligopolistic market structure for independent audit services (Q) Measures necessary to promote and protect auditor independence (Q) Impact of cultural norms and nuances on the performance of independent audits and the overall nature of a nation’s independent audit function Common challenges and problems faced by independent auditors around the globe Nature and structure of regulatory oversight for the accounting profession and auditing discipline across different nations Criminal and civil liability of audit firms and auditors Registered Auditors, South Africa, Case 8.4, 429–440 Impact of political forces on the development of a nation’s independent audit function (Q) Advantages and disadvantages of a separate professional credential for independent auditors (Q) Nature and purpose of South Africa’s “reportable irregularities” rule (Q) Impact of South Africa’s reportable irregularities rule on that nation’s independent audit function (Q) Measures necessary to persuade individuals from underrepresented groups to pursue careers in the accounting profession (Q) Impact of recurring audit failures on the international reputation and credibility of a nation’s capital markets Nature and structure of regulatory oversight for the accounting profession and auditing discipline across different nations Criminal and civil liability of accounting firms and individual auditors Zuan Yan, Case 8.5, 441–452 Impact of differing cultural norms across the globe on the ability of the worldwide accounting profession to reach a consensus on important ethical principles (Q) Impact of differing economic systems on the nature of financial reporting objectives (Q) Relevance of fundamental accounting concepts and principles within differing economic systems across the globe (Q) Impact of differing economic systems across the globe on the nature and purpose of independent audits (Q) Challenges and problems faced by accounting firms when performing audits in countries with authoritarian central governments (Q) Impact of political forces on the development and evolution of a nation’s accounting profession and independent audit function Unique challenges and problems faced by the accounting profession of the People’s Republic of China Nature and structure of regulatory oversight for the accounting profession and auditing discipline across different nations Civil liability of accounting firms Kaset Thai Sugar Company, Case 8.6, 453–456 Problems faced by accountants when performing independent audits and other professional services in hostile countries (Q) Responsibility of accounting firms to provide for the safety of their employees (Q) Impact of a given nation’s cultural norms and nuances on the performance of professional services engagements Australian Wheat Board, Case 8.7, 457–466 Relevance of Foreign Corrupt Practices Act to foreign companies that sell securities on U.S stock exchanges (Q) Responsibility of auditors to detect client bribes and related payments to obtain and retain international business relationships (Q) Audit procedures designed to detect bribes and other fraudulent payments (Q) Bribes vs “facilitating payments” (Q) “Social responsibility” mandate of corporate boards (Q) To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF TOPICS BY CASE 563 Australian Auditing Standards vs International Standards of Auditing (Q) Professional and business risks posed for accounting firms by high-profile clients OAO Gazprom, Case 8.8, 467–480 Challenges that accounting firms face when they establish practice offices in foreign countries (Q) Impact of cultural differences on business practices and ethical norms (Q) Responsibilities of auditors to client stockholders (Q) Threats to auditor independence (Q) Auditors’ responsibility to identify related parties and related-party transactions (Q) British “true and fair” audit philosophy vs the U.S philosophy of “fairly presented” (Q) Philosophical differences between IASB and FASB and resulting impact on standards promulgated by those two organizations (Q) Impact of social and governmental influences on the development of accounting and auditing practices Legal exposure faced by accounting firms in foreign countries 10 Professional and business risks faced by accounting firms that audit high-profile clients Tata Finance Limited, Case 8.9, 481–488 Impact on the design and performance of an independent audit when the client has a unique corporate culture and/or ethical code (Q) Professional standards relevant to consulting engagements (Q) Similarities and differences between auditing standards and standards for consulting engagements (Q) Responsibilities imposed on professional accountants by the client confidentiality mandate (Q) Auditor independence issues Institute of Chartered Accountants of India, Case 8.10, 489–500 Comparative advantages and disadvantages of a centralized vs a decentralized regulatory infrastructure for a nation’s public accounting profession (Q) Philosophical differences regarding the purpose of the independent audit function that impact the nature of that function across different cultures (Q) Strategic initiatives used by major international accounting firms to enter new markets (Q) Ethical issues that the major international accounting firms have faced when entering new markets (Q) Ethical and competitive issues posed by allowing accounting firms to advertise (Q) Using economic policies to shield a nation’s domestic accounting firms from foreign competition (Q) Nature and purpose of reciprocity agreements between national regulatory organizations within the global accounting profession (Q) Ethical, competitive, and regulatory issues posed by the outsourcing of professional accounting services (Q) Impact of political and social forces on the development and evolution of a nation’s accounting profession and independent audit function 10 International criticism of operating philosophy, policies, and procedures of major international accounting firms 11 Conflict between and among the accounting profession’s international regulatory bodies Societe Generale, Case 8.11, 501–516 10 Timing of loss recognition for income statement purposes (Q) Departures from GAAP necessary to prevent financial statements from being misleading (Q) Similarities and differences between French and U.S audit reports (Q) Similarities and differences between internal control objectives in France and United States (Q) Nature and purpose of “joint audits” (Q) Audit risk factors common to bank clients (Q) History of the independent audit function in France Internal control reporting in France Big Four firms’ involvement in the French audit market Key differences between IFRS and U.S GAAP Shari’a, Case 8.12, 517–526 Financial statement audits vs Shari’a compliance audits (Q) Application of compliance audit procedures (Q) Merging of financial statement and Shari’a compliance audits (Q) Socially responsible accounting standards (Q) To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF TOPICS BY CASE 564 Competitive conditions faced by Big Four firms in Islamic economy (Q) Lack of uniformity in Shari’a audit practices Promulgation of professional standards in Islamic economy Financial statement audit report in Islamic economy vs Shari’a compliance audit report Republic of the Sudan, Case 8.13, 527–532 Regulatory mandate of the SEC (Q) Definition of “material information” for financial reporting purposes (Q) Materiality standard applied by the SEC (Q) Differences in materiality concept in accounting context vs auditing context (Q) SEC’s concept of “full and fair disclosure” Mohamed Salem El-Hadad, Case 8.14, 533–538 Legal protections afforded whistleblowers in the United States (Q) Integration of whistleblowing measures into internal control systems (Q) Measures that whistleblowers can use to protect themselves from recriminations (Q) Responsibility to report fraud (by organizational insiders) (Q) Ethical dilemmas vs moral dilemmas (Q) Tae Kwang Vina, Case 8.15, 539–544 Differences between and among: consulting services, assurance services, attestation services and agreed-upon procedures engagements (Q) Nontraditional accounting services offered by major accounting firms (Q) Services requiring CPAs to be independent (Q) Required qualifications of CPAs on various professional service engagements (Q) Commercialism within public accounting profession Provision of environmental and labor practices audits by major accounting firms To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF CASES BY TOPIC Advertising by Accounting Firms: ICAI, Scott Fane Analytical Procedures: Crazy Eddie, Just for Feet, Leslie Fay, Royal Ahold Assessment of Client Management Competence: Crazy Eddie, Lincoln, North Face, ZZZZ Best Assurance Services: Tae Kwang Vina Audit Evidence—General: Cardillo, Golden Bear, Happiness Express, Health Management, Jack Greenberg, New Century Audit Evidence—Limitations: Bill DeBurger, CBI Holding, Gemstar, Golden Bear, Health Management, Ligand, Lincoln, Royal Ahold, ZZZZ Best Audit Failures: Gemstar, Golden Bear Audit Implications of Control Deficiencies: Crazy Eddie, First Securities, Goodner, Health Management, Jack Greenberg, Leslie Fay, New Century, United Way Audit Planning Issues: Crazy Eddie, Just for Feet, Leslie Fay, New Century, Royal Ahold, ZZZZ Best Audit Review Process: North Face, Tommy O’Connell Audit Risk (and/or its components): Livent, Triton Audit Sampling: Stern Audit Staffing Issues: New Century Audit Time Budgets/Audit Deadlines: Charles Tollison, Hamilton Wong, Tommy O’Connell Audit Workpapers: Enron, Health Management, Leslie Fay, New Century, NextCard, North Face Auditing a Multinational Company: AWB, Gazprom, Livent, Royal Ahold, Societe Generale, Triton, Zuan Yan Auditing Accounting Estimates: Health Management, Just for Feet, Ligand, New Century Auditing Accounts Payable (and other liabilities): CBI, Crazy Eddie Auditing Cash: Avis Love, CapitalBanc Auditing Contingencies: Cardillo Auditing Contracts and Commitments: Cardillo, Enron, Golden Bear, ZZZZ Best Auditing Intercorporate Investments: Madoff, Royal Ahold Auditing Inventory: Crazy Eddie, F&C, Goodner, Health Management, Jack Greenberg, Just for Feet, Leslie Fay Auditing PP&E: Dollar General Auditing Receivables: Happiness Express, Health Management, Just for Feet, NextCard Auditing Revenues: Avis Love, Campbell Soup, Crazy Eddie, Gemstar, Golden Bear, Ligand, Lincoln, Livent, North Face, Stern Auditor Independence: AIG, Avis Love, Crazy Eddie, Enron, Gazprom, Health Management, ICAI, Jamaica, Kansayaku, Koger, Leslie Fay, Lincoln, Madoff, New Century, Societe Generale, South Africa, Tae Kwang Vina, Tata Finance, Zuan Yan Auditor-Client Interaction Issues: AIG, Avis Love, Bud Carriker, CapitalBanc, Cardillo, CBI, Enron, F&C, Health Management, Howard Street, Jack Greenberg, Jamaica, Kansayaku, Kaset Thai, Lincoln, Livent, New Century, North Face, South Africa, Tommy O’Connell, Zuan Yan Big Four Accounting Firms and International Practice Development Issues: Gazprom, ICAI, Kansayaku, Kaset Thai, Shari’a, Societe Generale, South Africa, Tae Kwang Vina, Zuan Yan Career Development Issues: Arvel Smart, Bill DeBurger, Bud Carriker, Charles Tollison, David Quinn, Hamilton Wong, Hopkins, Leigh Ann Walker, Livent, NextCard, Sarah Russell, Thomas Forehand, Tommy O’Connell, Waverly Holland, Wiley Jackson Client Acceptance/Retention Issues: Bud Carriker, CBI, Gazprom, Jack Greenberg, Kansayaku, Kaset Thai, Lincoln, Tata Finance, Thomas Forehand, Zuan Yan Client Confidentiality: American Fuel & Supply, Creve Couer, David Quinn, ICAI, South Africa, Waverly Holland Client Development Activities: Charles Tollison, Hopkins, Scott Fane, United Way Client Management Integrity Issues: AWB, Bud Carriker, Campbell Soup, CapitalBanc, Cardillo, CBI, Crazy Eddie, David Myers, Enron, First Securities, F&C, Gazprom, Gemstar, Golden Bear, Happiness Express, Health Management, Jack Greenberg, Jamaica, Kansayaku, Kaset Thai, Leslie Fay, Livent, Madoff, New Century, NextCard, North Face, Royal Ahold, South Africa, Tata Finance, Tommy O’Connell, Triton, Zuan Yan, ZZZZ Best Client-imposed Audit Scope Limitations: Health Management, Jack Greenberg, ZZZZ Best Collegial Responsibilities of Auditors: Bill DeBurger, Bud Carriker, Charles Tollison, David Quinn, Gazprom, Hamilton Wong, ICAI, Leigh Ann Walker, Lincoln, NextCard, North Face, Sarah Russell, Societe Generale, Tommy O’Connell, Waverly Holland, ZZZZ Best 565 To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com 566 SUMMARY OF CASES BY TOPIC Comfort Letter/Due Diligence Engagements: Livent Commercialism within Public Accounting Profession: AIG, Enron, Gazprom, ICAI, Kansayaku, Scott Fane, Shari’a, Societe Generale, Stephen Gray, Tae Kwang Vina, Zuan Yan Competition in U.S Public Accounting Profession: Lincoln, Scott Fane Compilation Engagements: Howard Street Compliance Audits: Shari’a, Tae Kwang Vina Confirmation Procedures: CBI, Happiness Express, Just for Feet, Royal Ahold Conflict in Auditor and Consultant Roles: AIG, Enron, Gazprom, ICAI Control Environment: AWB, Campbell Soup, CapitalBanc, Cardillo, CBI, Crazy Eddie, Dollar General, Enron, First Securities, F&C, Gazprom, Golden Bear, Goodner, Happiness Express, Health Management, Howard Street, Jack Greenberg, Jamaica, Kansayaku, Leslie Fay, Lincoln, Livent, New Century, North Face, Royal Ahold, South Africa, Stern, Tata Finance, Triton, Trolley Dodgers, United Way, Zuan Yan, ZZZZ Best Convergence of International Accounting and/or Auditing Standards: AWB, Gazprom, ICAI, Kansayaku, Royal Ahold, Shari’a, Societe Generale, South Africa, Zuan Yan CPAs in Non-audit Roles: AIG, AWB, Creve Couer, Gazprom, Health Management, Howard Street, ICAI, Jamaica, Kaset Thai, Livent, Tae Kwang Vina, Tata Finance, Thomas Forehand Departures from GAAP (necessary): Societe Generale Detection, Disclosure, and Audit Implications of Illegal Acts: AWB, Enron, Gazprom, Happiness Express, Health Management, South Africa, Tata Finance, Triton Disagreements between Auditors: American Fuel & Supply, Bill DeBurger, Bud Carriker, Gazprom Earnings Management: AIG, Campbell Soup, Dollar General, Societe Generale Engagement Letter: Jamaica, Stern, ZZZZ Best Engagement Risk: Ligand Ethical Conduct vs Legal Conduct: Gemstar Ethical Dilemma (definition of): Mohamed Salem El-Hadad Ethical Dilemmas vs Moral Dilemmas: Mohamed Salem El-Hadad Ethical Dilemmas, Resolution of: American Fuel & Supply, Arvel Smart, Avis Love, Bill DeBurger, Bud Carriker, Cardillo, Creve Couer, David Myers, David Quinn, Gazprom, Hamilton Wong, Health Management, ICAI, Jamaica, Just for Feet, Kansayaku, Leigh Ann Walker, Livent, Mohamed Salem El-Hadad, Societe Generale, South Africa, Suzette Washington, Thomas Forehand, Tommy O’Connell, Triton, Waverly Holland, Wiley Jackson Ethical Issues Faced by U.S Accounting Firms in International Markets: AWB, Gazprom, ICAI, Kansayaku, Kaset Thai, Shari’a, South Africa, Tae Kwang Vina, Triton, Zuan Yan Ethical Issues Involving Accounting Majors: Arvel Smart, Suzette Washington, Wiley Jackson Ethical Responsibilities of Accountants in Private Industry: Cardillo, David Myers, Dollar General, Enron, F&C, Golden Bear, Health Management, Jack Greenberg, Jamaica, Leslie Fay, Livent, New Century, Suzette Washington, Tata Finance, Triton, Trolley Dodgers, Waverly Holland Expanding Product Line of Accounting Firms: AIG, AWB, Enron, ICAI, Kaset Thai, Shari’a, Stephen Gray, Tae Kwang Vina Expert Opinions as Audit Evidence: Lincoln Foreign Corrupt Practices Act: AWB, Triton Fraud Detection and/or Disclosure: AWB, CapitalBanc, Cardillo, CBI, Crazy Eddie, Dollar General, Enron, First Securities, Gazprom, Gemstar, Golden Bear, Happiness Express, Health Management, Jack Greenberg, Jamaica, Kansayaku, Leslie Fay, Lincoln, Livent, Madoff, New Century, NextCard, North Face, Royal Ahold, South Africa, Stern, Tata Finance, Triton, United Way, ZZZZ Best Fraud Reporting Responsibility (by members of an organization): AWB, Cardillo, F&C, Livent, Mohamed Salem El-Hadad, Triton Energy “Full and Fair Disclosure” Doctrine (SEC): Sudan Hiring of Auditors by Former Clients: Crazy Eddie, Health Management, Jamaica, Lincoln, Livent History of Accounting Profession/Audit Function in Nations Other Than U.S.: Gazprom, ICAI, Kansayaku, Shari’a, Societe Generale, South Africa, Zuan Yan History of U.S Public Accounting Profession: Enron Identification of Inherent Risk Factors: Crazy Eddie, Jack Greenberg, Just for Feet, Leslie Fay, Livent, Royal Ahold, Societe Generale Identification of Internal Control Objectives: Goodner, Howard Street, Jack Greenberg, Trolley Dodgers Identification of Internal Control Risk Factors: Just for Feet, Lincoln, Societe Generale Identification of Management Assertions: CapitalBanc, Golden Bear, Lincoln, ZZZZ Best IFRS vs U.S GAAP: Royal Ahold, Societe Generale Impact of Cultural Norms and Values on Independent Audit Function: Gazprom, ICAI, Kansayaku, Shari’a, Societe Generale, South Africa, Zuan Yan Internal Auditors: CapitalBanc, Goodner, Jamaica, Mohamed Salem El-Hadad, Triton To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com SUMMARY OF CASES BY TOPIC 567 Internal Control Deficiencies: First Securities, Goodner, Health Management, Howard Street, Jack Greenberg, Leslie Fay, New Century, Triton, Troberg, Trolley Dodgers, United Way Internal Control Objectives: Goodner, Howard Street, Mohamed Salem El-Hadad, Societe Generale, Troberg, Trolley Dodgers, Triton, United Way Internal Control Reporting: First Securities, Jack Greenberg, New Century, Societe Generale Internal Controls for Not-for-Profits: Mohamed Salem El-Hadad, United Way Internal Controls for Small Businesses: Howard Street, Suzette Washington, Troberg International Accounting Issues: Gazprom, Royal Ahold, Shari’a, Societe Generale, South Africa, Zuan Yan International Audit Reports: AWB, Gazprom, Shari’a, Societe Generale International Auditing Practices: Shari’a, Societe General International Markets, Competitive Issues: Gazprom, ICAI, Kansayaku, Shari’a, Societe Generale, Tae Kwang Vina, Zuan Yan Issues Related to the Global Accounting Profession: Gazprom, ICAI, Kansayaku, Kaset Thai, Royal Ahold, Shari’a, Societe Generale, South Africa, Sudan, Tae Kwang Vina, Zuan Yan Lack of Definitive Guidelines for Client Transactions: Enron, Livent, Societe Generale Legal Liability—Common Law: First Securities, Stern Legal Liability—Criminal: Enron, Kansayaku, Madoff, NextCard, Thomas Forehand Legal Liability—General: American Fuel & Supply, First Securities, Hopkins, Jamaica, Leslie Fay, Lincoln, Madoff, New Century, Stern, Waverly Holland Legal Liability—International Markets: Gazprom, ICAI, Kansayaku, Royal Ahold, South Africa, Zuan Yan Legal Liability—1933 Act: First Securities, Stern Legal Liability—1934 Act: Campbell Soup, First Securities, Health Management, Livent, Stern Letter of Representations: Livent “Lowballing” Phenomenon: Crazy Eddie, Scott Fane, Tae Kwang Vina Materiality Issues: Avis Love, Gemstar, New Century, North Face, Sudan Need to Follow-up on Suspicious or Unusual Client Transactions: AIG, Avis Love, Campbell Soup, CapitalBanc, Cardillo, CBI, David Myers, Enron, Gazprom, Gemstar, Golden Bear, Goodner, Happiness Express, Health Management, Jack Greenberg, Jamaica, Just for Feet, Lincoln, Livent, New Century, NextCard, North Face, Royal Ahold, Stern, Triton, ZZZZ Best Opinion Shopping: Cardillo, Lincoln, Livent, Royal Ahold Outsourcing of Accounting Services: ICAI Peer Reviews: Madoff Personal Integrity of Auditors: Arvel Smart, Avis Love, Bill DeBurger, Bud Carriker, Cardillo, David Quinn, Enron, Hamilton Wong, Health Management, Jamaica, Kansayaku, Koger, Leigh Ann Walker, Madoff, New Century, NextCard, North Face, Royal Ahold, Sarah Russell, South Africa, Tommy O’Connell, Wiley Jackson Personal Lives vs Professional Work Roles: Avis Love, Bill DeBurger, Charles Tollison, David Myers, Hamilton Wong, Health Management, Hopkins, Kansayaku, Leigh Ann Walker, Ligand, Sarah Russell, Thomas Forehand, Tommy O’Connell, Wiley Jackson Personnel Issues within Audit Firms: Bill DeBurger, Bud Carriker, Charles Tollison, Hamilton Wong, Hopkins, Kaset Thai, Leigh AnnWalker, Ligand, New Century, NextCard, Sarah Russell, South Africa, Tommy O’Connell Practice Development Issues—International Markets: Gazprom, ICAI, Kansayaku, Kaset Thai, Royal Ahold, Shari’a, Societe Generale, South Africa, Tae Kwang Vina, Zuan Yan Predecessor-Successor Auditor Communications: Lincoln, ZZZZ Best Premature Signoff of Audit Procedures: New Century, Tommy O’Connell Privileged Communications for Auditors: Creve Couer Professional Roles of Auditors: Avis Love, Bill DeBurger, Bud Carriker, Charles Tollison, Enron, Hamilton Wong, Health Management, Jamaica, Leigh Ann Walker, Ligand, New Century, NextCard, Sarah Russell, Tommy O’Connell Professional Service Engagements Requiring Independence: Tae Kwang Vina Professional Skepticism: CBI, Enron, Gemstar, Golden Bear, Happiness Express, Health Management, Jamaica, Ligand, New Century, North Face Public Company Accounting Oversight Board (PCAOB): Ligand Quality Control Issues for Audit Firms: Bill DeBurger, Bud Carriker, Cardillo, CBI, Gemstar, Hamilton Wong, Hopkins, ICAI, Koger, Leigh Ann Walker, Ligand, Lincoln, New Century, NextCard, North Face, South Africa, Tae Kwang Vina, Tommy O’Connell, Zuan Yan Receipt of Commissions by CPAs: Stephen Gray Reciprocity Agreements between International Regulatory Bodies: ICAI Regulation of the U.S Accounting Profession: Enron, NextCard, North Face, Madoff, Scott Fane, Stephen Gray To download more slides, ebooks, solution manual, and test bank, visit http://downloadslide.blogspot.com 568 SUMMARY OF CASES BY TOPIC Regulatory Issues Related to Global Accounting Profession: AWB, Gazprom, ICAI, Kansayaku, Kaset Thai, Livent, Royal Ahold, Shari’a, Societe Generale, South Africa, Sudan, Zuan Yan Related-Party Transactions: Enron, Gazprom, Lincoln, Livent Review of Interim Financial Statements: Cardillo, Enron, New Century, North Face, ZZZZ Best Rule-Making Processes: Gazprom, ICAI, Kansayaku, Royal Ahold, Scott Fane, Shari’a, South Africa, Stephen Gray, Zuan Yan Sarbanes-Oxley Act of 2002: Ligand, New Century, NextCard, Societe Generale, United Way SAS No 50 Reports: AIG, Livent Scope of Internal Controls: Troberg Scope of Services (provision of non-audit services): AIG, Enron, Stephen Gray, Tata Finance Securities and Exchange Commission: AIG, CapitalBanc, Cardillo, Crazy Eddie, Dollar General, Enron, First Securities, F&C, Gemstar, Health Management, Jamaica, Just for Feet, Koger, Leslie Fay, Lincoln, Livent, Madoff, New Century, NextCard, North Face, Royal Ahold, Sudan, Triton, ZZZZ Best SEC’s 8-K Auditor Change Rules: Cardillo, ZZZZ Best Societal Role of Audit Function: Enron, First Securities, Gazprom, ICAI, Kansayaku, Lincoln, Madoff, New Century, Scott Fane, South Africa, Stern, Zuan Yan Subsequent Discovery of Errors: American Fuel & Supply, Ligand, New Century, North Face Substance over Form Concept: AIG, Campbell Soup, Enron, Gazprom, Lincoln, Societe Generale Supervision of Staff Accountants: CapitalBanc, Leigh Ann Walker, Tommy O’Connell Understanding the Client’s Industry/Business Model: Campbell Soup, Crazy Eddie, Enron, Gemstar, Happiness Express, Jack Greenberg, Just for Feet, Leslie Fay, Lincoln, Livent, New Century, NextCard, North Face, Royal Ahold, Triton, ZZZZ Best Walk-through Audit Procedure: Jack Greenberg Whistleblowing: Enron, Jamaica, Mohamed Salem El-Hadad Withdrawal of an Audit Report: American Fuel & Supply, CBI, Happiness Express, Health Management, Leslie Fay, Livent, New Century 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