Accounting Oversight Board Summary

3. Substantive tests procedures: The audit team should perform substantive tests on Smackey’s accounting transactions and

As indicated by PCAOB, the written representation cannot be a substitute for substantive procedures. Thus, auditors did not perform adequate procedures to test the management’s estimates. What’s more, inquires were heavily relied on the management’s integrity. Auditors ignored the professional skepticism. Finally, the 30 years and 15 years useful lives, which were adopted previously by Little Drummer, were not appropriately audited. Since the engagement team did not contact the predecessor auditors, the team did not get any audit documents from predecessor auditors regarding the assumptions of 30 years and 15 years. There was no evidence to show the reasonableness of these two assumptions.

In general, the main criticisms of the PCAOB are that it has not made sufficient it’s regulatory power, it is slow to act in its investigations of enforcement cases, and that it targets enforcement on smaller firms in order to protect the Big 4 firms, which are regarded as “too big to fail.” While I do not disagree with the fact that the PCAOB is slow and has not produced a significant amount of regulation, I do disagree with the criticism of the PCAOB as a regulatory body in general. I feel that certain members of the public desire absolute transparency in financial reporting, but do not understand the economy required to so. It is nearly impossible, not to mention impractical, to breakdown every aspect of a multi-billion dollar corporation to ensure that every transaction is accounted for

Relevant professional standards for this assignment are AU Section 230 “Due Care in the Performance of Work,” AU Section 326 “Evidential Matter,” AU Section 330 “The Confirmation Process,” and AU Section 339 “Audit Documentation.”

There are some factors existing in the United States during 2008 might have accelerated Deloitte & Touche’s decision to issue an audit opinion modified to disclose going-concern uncertainties.

Secondly, although the audit might have been in its final stages, the fact that there had already been a sticking point between the auditors and CMD as to the validity and accounting procedures of the companies write-off’s of accounts receivable, once the audit team was made aware of the pending lawsuit of CMD by one of its clients for the exact same reason, they should have reconsidered their position on the evidence (suspension of judgment) and made sure to review that evidence before issuing an opinion.

The PCAOB is the public accounting oversight board created by the Congress via the Sarbanes-Oxley Act. It appears the PCAOB has laid the groundwork to effectively monitor and review the public accounting

As a result, in this case, I do believe that Deloitte & Touche were guilty of the overall malpractice that was finalized

The company’s financial report ending 30 June 2009 was audited by Mr. DELOITTE TOUCHE TOHMATSU and Mr. TOM EMBASSI, of the Charted Accountants firm “DELOITTE”

The behaviors and attitudes of the auditor’s was very professional in exercising due diligence and proper training in the following manners. Oloff tried to contact the attorney several times by phone, left five messages and when she inquired about voice mail and email received a no answer to both types of technology. She also tried to set an appointment but was fended off of this type of communication as well. Corliss was put off about speaking with the previous auditors by the owner citing that there were personality conflicts and his concern was they would speak ill of the company. Corliss reminded him that it is required part of the procedure to accept them as a client. Gabelli investigated the going concern aspect, in

With these aspects of the audit plan in mind, Deloitte seemed to have enough evidence but did not enforce the evidence enough. Although there is no mention of (2) an established materiality in the case, the amount of contention over the discount rate by GM’s management should have been a reason for higher concern with the audit team. Also, the variable effect that the discount rate had on GM’s financial

ReferencesHolstrom, Gary & Ray, Thomas. PCAOB Standards-Setting Update Prepared for the Auditor's Report (Summer 2006). Retrieved on February 7, 2007, from http://aaahq.org/audit/Pubs/Audrep/06summer/item04.htmMcDonnell, Patrick. The PCAOD and the Future of Oversight. Retrieved February 7, 2007, from http://www.aicpa.org/pubs/jofa/dec2004/mcdonn.htmThe PCAOB. Annual Report for 2005 & 2007 Annual Budget. Retrieved on February 7, 2007, from http://www.pcaobus.orgWebCPA. Online Expo Center. Retriev

Carcello, Hollingsworth and Mastrolia tested whether PCAOB annual inspections result in higher quality financial reporting (Carcello, Mastrolia, & Hollingsworth, 2011). They compare abnormal accruals reported by audit clients before and after initial inspections by PCAOB (Carcello, Mastrolia, & Hollingsworth, 2011). If the inspections result in improved auditing, they expect to see less earnings management after the initial inspection (Carcello, Mastrolia, & Hollingsworth, 2011). For comparison purposes, they make the same observations before and after AICPA peer review inspections made prior to SOX (Carcello, Mastrolia, & Hollingsworth, 2011). They find a significant decrease in income-increasing abnormal accruals in the first and second years

Additional concerns have been made in regards to the red flags missed by auditors. First of all, auditors should have been alarmed by the size of the cash account held in the Cayman Islands. Auditors should have remained skeptical about the existence of this account. They should’ve addressed this red flag with

Just days ago the Board of Trustees of the Financial Accounting Foundation released a news update to the procedures of the PCC. The release was to explain several updates made to the PCC in regards to their interaction in the FASB’s active projects. The updates came in response to more than fifty letter