American Fuel & Supply Company

An implicit theme of this case that I want students to recognize is the contrast between the persistent and vigorous efforts of David Sokol to “get to the bottom” of the suspicious items he uncovered in JWP’s accounting records versus what Judge William Conner referred to as the “spinelessness” of JWP’s auditors. The JWP audits were similar to most problem audits in that the auditors encountered numerous red flags and questionable entries in the client’s accounting records but, for whatever reason, apparently failed to thoroughly investigate those items. On the other hand, Sokol refused to be deterred in his investigation of the troubling accounting issues that he discovered. The relationships that existed between members of JWP’s accounting staff and the Ernst & Young audit team apparently influenced the outcome of the JWP audits. Of course, the Sarbanes-Oxley Act of 2002

CAS 300 requires auditors to their audit using a risk based model where the nature, timing and extent of audit procedures are based on the assessed risk of material misstatement. Pickett (2006) argues that for audits to be effective and efficient, much of the audit effort should be focused on areas that are considered to pose the highest audit risk. Additional audit procedures should be linked to individual audit assertions whereas other audit procedures need to be performed as and when needed. Thus, for an audit plan to be put in place, it is necessary for an auditor to come up with a risk profile of the client comprising an understanding of the business operating by the audit client, assess business risk and also perform its preliminary analytical review.

The auditor must review disclosures for adequacy, and if the auditor concludes that information disclosures are not reasonably adequate, the auditor must state so in the auditor’s

It is also correct that each Auditors of Sloan & Spencer Auditing Firm LLC are most experienced in the specified industry and have complete knowledge, familiarity with retail rules and regulations concerning aspect of accounting procedures. It is our firm duty to be versed in the CASS, and other payment settlement systems, and other auditing experience. The auditors of Sloan & Spencer Auditing Firm LLC will give their qualitative and technological sources to each assignment individually. Our firm Assurance service is performed by our professional CPAs, possessing the goal of improving Apollo Shoes financial information or the contest of the financial information so that management decision-making can make more informed and making better decisions.

The act requires management to disclose all material information or changes within their accounting processes. By requiring senior management to review the reports they are held accountable for the financial accounting of the firm, and procedures to prevent employees and other members within an organization from committing fraud or theft and management is legally responsible if material misstatements have been made. By making management accountable then they are less likely to commit fraud if faced with jail time. Management and stockholders frequently have different goals. Management often wishes to expand and use the company’s assets in different ways than a stockholder. Management’s accountability of the financial reports often helps encourage management to use company assets in appropriate ways. Disclosures were also a reduction in risk of fraud because all material information must be disclosed. By requiring this disclosure if a company’s net income increased this year due to a

Gauthier, S. J. (n.d.). Better Understanding of The Financial Statement Audit. Retrieved 06 26, 2011, from

If the client is publicly held, the auditor must also report the matter directly to the SEC. Such decisions are complex and normally involve consultation by the auditor with the auditor’s legal counsel.

This case established that an auditor could be sued by a primary beneficiary for damages from negligence. A primary beneficiary is a party that has a direct benefit from the audit. Non-privity parties could also sue for gross negligence. This increased the auditor’s legal exposure to third parties. The SEC of 1934 reflected these changes and many others; one significant change was that auditor’s had a much higher litigation risk due to their new responsibility to third parties.

Did the confidentiality agreement that Minkow required Ernst and Whitney to sign improperly limit the scope of the ZZZZ Best audit? Why or why not? Discuss general circumstances under which confidentiality concerns on the part of a client may properly affect audit planning decisions. At what point do client imposed audit scope limitations affect the type of audit opinion issued?

This paper explores the ZZZZ Best Company which was begun by a 16 year old individual who was able to pull the wool over the eyes of many customers, investors and auditors. This paper will define the difference between review and audit when it comes to financial reports, comments on the procedures provided with regard to the management assertion of occurrence, verification of payments for jobs and how they can lead auditors to improper conclusion, the purpose of predecessor-successor auditor communications, as well as whom needs to initiate the communication and information that needs to be obtained. The paper also addresses the limitations of the confidentiality agreement and how and when

For any audit engagement APES 110 section 100.5 sets out five fundamental principles that all audit members must abide by (Gay & Simnett 2012, p. 86). They must act with integrity, objectivity and not allow bias. They need to ensure professional competence, confidentiality and comply with the relevant legislation (Gay & Simnett 2012, p. 86). As such one of the principle requirements for auditors is auditor independence from their clients. In Harris-Scarfe’s case, this was not possible because the deputy chairman used to be a partner at Price Waterhouse, the firm’s auditors (Buchanan 2004, p. 69).

This frequently puts the auditor in the position, in effect, of deciding whether a company is able to obtain the funds it needs to continue operating. Thus, the auditor’s qualification tends to be a self-fulfilling prophecy. The auditor’s expression of uncertainty about the company’s ability to continue may contribute to making it a certainty.

Cable provider Adelphia was one of the major accounting scandals of the early 2000s that led to the creation of the Sarbanes-Oxley Act. A key provision of the Act was to create a stronger ethical climate in the auditing profession, a consequence of the apparent role that auditors played in some of the scandals. SOX mandated that auditors cannot audit the same companies for which they provide consulting services, as this link was perceived to result in audit teams being pressured to perform lax audits in order to secure more consulting business from the clients. There were other provisions in SOX that increased the regulatory burden on the auditing profession in response to lax auditing practices in scandals like Adelphia (McConnell & Banks, 2003). This paper will address the Adelphia scandal as it relates to the auditors, and the deontological ethics of the situation.

Dixon is raising debt capital by issuing long3 and short term bonds; an interest rate of

A company prepares financial statement to provide information about its financial position and performance. This information is in turn used by a wide range of stakeholders (such as investors, banks, customers, suppliers etc) in making economic decisions with respect to respective economic interest in the company. Typically, in terms of ownership by investment in shares of the company, shareholders though own the company but do not manage it. Therefore, the shareholder and other such stakeholders to get comfort in taking sound decision need independent assurance from the auditors that the financial statements reflect true and fair view of the company affairs in all material respects. Hence, in order to enhance the level of