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such differences could be troublesome for auditors of transatlantic entities containing parents or subsidiaries in each continent, where legal resource and allowable liability limits differ. the purpose of this article are to discuss the abandoing of interpretation 101-16/ describe some effects of interpretation 507-8 and compare and contrast global approaches to limiting accountants ' liability throug the use of engagement letter. rule 101 interpret thta indemnification agreements remove a major stimulus to objective and unbiased consideration of problem encountered in an egagement. regulator wants to retain the right to pursue recovery of losses against auditors of failed institutions ' safety and soundness.
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The person performing the audit should have come across consignment documentation and as a result should have requested to see that inventory.

3. The retail consumer electronics industry was undergoing rapid and dramatic changes during the 1980s. Discuss how changes in an audit client 's industry should affect audit planning decisions. Relate this discussion to Crazy Eddie.

In the early 1980 the consumer electronics industry was growing at an explosive pace. Between the 1981 and 1984 the total sales for the industry doubled. To support increasing sales massive amounts of inventory has to be procured, marked up and sold to consumers. Inventory becomes the biggest asset a retailer has. As part of the audit planning processes the inspection of the inventory system and verification of the actual inventory numbers should have been a priority. Crazy Eddie was able to inflate its financial results by fraudulently altering its inventory counts and was able to conceal these activities from the auditors for several years.

4. Explain what is implied by the term lowballing in an audit context. How can this practice potentially affect the quality of independent audit services?

The term lowballing in an audit context implies that the auditor is pricing its auditing services way below competition in order to get the business. The quote for the auditing services may be at or even below
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