Case Number: 3.1 Date: 09/02/2013 Case Requirements: [1] Brent’s alternatives include following the audit plan and reporting the time accurately, even if the time needed exceeds 35 hours. The positives to following the plan and reporting time spent accurately include doing his duty by adhering to the audit plan and ensuring that this years and future audits are conducted with realistic expectations as to the time and budget needed. A negative to this alternative is the damage that will ensue
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The Sarbanes-Oxley Act (SOX) was the result of innumerable corporate scandals such as Enron, WorldCom and Tyco. These companies were misrepresenting their financial reporting to investors and stakeholders to make themselves look more financially stable when in reality they were not. This misrepresentation resulted in huge financial losses and the mistrust of investors in the market. In order to better control financial reporting and restore investors trust, the SOX act was passed. Sarbanes-Oxley
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First of all, line costs are the amounts that WorldCom paid other companies to be able to use their communication networks for their customers and it included access fees and transport charges for messages. The line costs are an expense and instead of reporting them as an expense at the time, they chose to hold off on paying them and adding them in as an expense so that it would look as though WorldCom was earning more than they really were. The first solution should have been to relook at the
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1. Should auditors insist that their clients accept all proposed audit adjustments, even those that have an “immaterial” effect on the given financial statements? Defend your answer. No. Clients have rights to reject some proposed audit adjustments if they disagree with these adjustments. According to the part of the fifth and final phase in the audit opinion formulation process in our textbook, some additional evidence would be gathered if the evidence does not support a fair presentation. It
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Esanda Finance Corporation Ltd v Peat Marwick Hungergords – indirect recipient of info • Facts: financier (Esanda) lent money to Excel in reliance on E’s audited accounts (Peat Marwick) and reports - could not recover money. Sued E’s auditors for alleged negligence. • Issue: whether auditors owe a duty of care to persons other than their clients who have relied on their unqualified reports in entering various financial transactions. • Held: Esanda appealing – appeal dismissed auditors do not
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Adequacy of Legal Protection for Auditors Loganathan Krishnan Department of International Business, Faculty of Accountancy and Management, Universiti Tunku Abdul Rahman, loganathan@utar.edu.my This paper was presented at the International Conference on Emerging Issues in Public Law: Challenges and Perspectives, Faculty of Law, Universiti Teknologi MARA (UiTM), 13th to 14 December 2011, Shah Alam, Malaysia. ABSTRACT In Newton v Birmingham Small Arms Co (1906), the English court made
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Effect of Unethical Behavior Article Analysis Lindsey Davison August 26, 2013 Acc/291 Jonathan Gillen Effects on Financial Statements When the Sarbanes-Oxley Act was implemented in 2002, it impacted a lot of publically traded companies. There were many companies that were using unethical practices to boost their numbers and give the top dogs of the company’s loads of money. Companies like Enron, Tyco, and WorldCom were companies that most of us heard about getting hit the hardest once
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http://pcaobus.org/Standards/Auditing/Pages/default.aspx 1. After the report release date – can the auditor delete or discard or add information to the audit work papers? Information cannot be deleted or discarded from the audit work papers after the report release date, but information can be added to the work papers after the release date. 2. Certain audit matters may be documented in a central repository for the public accounting firm or in the particular office participating
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prospective shareholders and lenders are accurate.(Li-ying 2011). The law, as I have said was enacted as a knee jerk reaction to the Enron collapse, it was discovered that Arthur Anderson the accounting firm for Enron was both their internal and external auditors. The two companies were so comingled it was hard to differentiate which employee worked for who, both the CEO and CFO both had previously worked for Arthur Anderson (Ryu, 2009). The law which is known as SOX changed how responsible auditors
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Ethicality of Accounting Activities ETH 376 May 6, 2013 Susan Paris Ethicality of Accounting Activities The WorldCom case shows an example of what unethical behavior is. Cynthia Cooper indicated the activities were fraudulent and describes the individuals involved. More than one department was to blame for the fraud at WorldCom. Cynthia Cooper with the help of Glyn Smith initiated the audit that led to the unethical activities within the company. WorldCom inflated their earnings to
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