...PART 1 – ANALYSIS OF THE CURRENT SITUATION: Summary: The current leadership situation is horrible at the company. The sales for the Willamette Company have been slowing down in the past couple of years because of bad customer service (Garlington). John went through the paper work and found that the sales people seem to leave off the specifications and the designers have to spend hours on the phone to understand what the client customer actually wants the machine to be able to do. The company loses time and money to clarify these specifications, and they occasionally need to pay additional costs due to differences in prices for parts so they can meet the changed specifications. Also, the sales people are not asked to correct their mistakes. John also, found a letter addressed to Fred, the previous boss, indicating one of the CAD designers had quit the company due to “…ongoing management harassment AND complete lack of training for the sales people, who do not know how to write a design specification for a standard hydraulic pump” (Garlington). John has been very successful in leading the team. He had a good relationship with all his employees in the past and doesn’t want that to change in this company. He has realized that in that this team was not in very good hands in the past, and they were under a strict supervision. The employees are used to being told what to do otherwise they don’t know what needs to be done. Their previous leader kept everything under his control. John...
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...Comprehensive Case A.1 – Enron I. Technical Audit Guidance To maximize the knowledge acquired by students, this book has been designed to be read in conjunction with the post-Sarbanes-Oxley technical audit guidance. All of the post-Sarbanes-Oxley technical guidance is available for free at http://www.pcaobus.org/Standards/index.aspx. In addition, a summary of the Sarbanes-Oxley Act of 2002 is also available for free at http://thecaq.aicpa.org/Resources/Sarbanes+Oxley/Sarbanes-Oxley+–+The+Basics.htm. II. Recommended Technical Knowledge The Sarbanes-Oxley Act of 2002 Section 103 Section 201 Section 203 Section 204 Section 206 Section 301 Section 302 Section 305 Section 401 Title IX PCAOB Auditing Standard No. 5 Paragraph #2 Paragraph #9 Paragraph #11 Paragraph #21-22 Paragraph #25 Paragraph #28-30 Paragraph #69 Paragraph #A5 (in Appendix A) Paragraph #A8 (in Appendix A) III. Case Questions – Answer Key 1. Refer to the second general standard of Generally Accepted Auditing Standards (GAAS). What is auditor independence and what is its significance to the audit profession? What is the difference between independence in appearance and independence in fact? The second general standard of generally accepted auditing standards (GAAS) is, “In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors.” If the auditor is not independent, the financial statements are considered unaudited...
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