child’s name, or encouraging his or her spouse to do so. Due to the fact that the family works as one unit, the entire family is required to be independent of any audit clients. The final section of the Interpretation of Rule 101-1, Section C, prohibits auditors on the engagement team from previously or currently being employed by the audit client. The requirement is that the attest engagement team member must not have served as director, officer, promoter, underwriter, or held any management position
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requesting an audit, B&F is asked to provide assistance with regard to the upcoming IPO and Ocean’s newly installed IT system. This paper is structured in two different memos. The first one elaborates on the evaluation of Ocean from five critical standpoints and concludes with an opinion on whether to accept the engagement. The latter one points out five critical factors, which have to be taken into account when the audit is accepted. 2. Independence review While establishing the audit team, independence
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responsibility for failed internal controls was handed out to the right people. Chief executive officers and higher-ups are held responsible for a company’s internal controls. SOX act also implanted that an outside party auditor preform the necessary audits to ensure the internal controls are efficient and are doing their job. A company should have an efficient internal control in place before any business is preformed. Internal Control Deficiencies Internal controls keep things safe within a company
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primary reason for an audit by an independent, external firm is to Provide increased assurance to users as to the fairness of the financial statements Independent CPAs perform audits on the financial statements of issuers. This type of auditing can best be described as A discipline that attests to financial information presented by management Users of an issuers financial statements demand independent audits because Management may not be objective in reporting An audit of the financial statements
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Goodman & Goodman, a CPA firm, has audited Toys City, Inc., for the last three years. Toys City, Inc., is a local retailer of children's toys and games. Each of the three previous audits resulted in unqualified opinions. Toys City's year end is 31 December, and Goodman & Goodman has agreed to provide the audit report on 1 March, 2010, ten days before the annual board of directors meeting. Mr. Lam, the manager from Goodman & Goodman in charge of the Toys City engagement, recalls that last year
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section 301.4 of Sarbanes-Oxley Act of 2002, each audit committee shall establish procedures for complaints regarding accounting, internal accounting control, and auditing matters, and the anonymous complaints regarding questionable accounting or auditing matters. However, in this case, the WorldCom Company did not have the procedures for anonymous complaints, so Cynthia Cooper decided to go over Sullivan’s head and reported her findings to the audit committee. This was a huge gamble for her and was
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Quest was a communications company that was rapidly growing in 1999 and 2000. It would consistently meet its aggressive revenue targets and was a great company for its investors. After announcing that they would be merging with US West, their stock price dropped significantly. In order to prevent any further drops in stock price, high pressure was placed on Qwest’s employees to meet their high revenue targets. Soon afterwards, Qwest’s stock price had increased significantly, to higher than its original
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Case Studies to accompany Auditing and Assurance Services in Australia by Gay and Simnett Prepared by Renee Radich and Philip Ross [pic] McGraw-Hill Australia [pic] A Division of The McGraw-Hill Companies Copyright © 2002 McGraw-Hill Australia Pty Limited Additional owners of copyright are named in on-page credits. Apart from any fair
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interest of the company In this case, one of the directors of Delima Enterprise is Encik Zayed. He had breach his duty to exercise power in good faith. Encik Zayed engaged the external Auditor Aziz & Co (Chartered Accountant), to perform statutory audit. The Auditor expressed their intention to qualify the Financial Statements due to several unresolved issues. His trying to negotiate with the Auditors to unqualified the report, however, the auditor did not agree. So, Encik Zayed was planned to terminate
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Homework #2 1. There are potential agency conflicts in the exchange between HP director Sam Ginn and McKinsey experts. McKinsey consultants wanted the merger between HP and Compaq to occur because they might have been able to collect higher fees. Therefore, they immediately squashed any doubts and gave advice for the merger to happen, even if carrying out such an acquisition would have destroyed value for HP shareholders. 2. For Patricia Dunn, the past successful consolidation mergers
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