Case Study Essay

1007 Words Nov 4th, 2014 5 Pages
5-2: ZZZZ Best 1. I think that auditors should be held liable for failing to discover fraud. There are many ways the fraud could have been discovered over the years if the auditors performed an objective audit that followed rules and regulations. It is an auditor’s obligation to perform an audit with objectivity, skepticism, independence, and objectivity. Ernst & Whinney failed to meet these criteria. The auditors did not follow professional skepticism because when Minkow asked them to sign a confidentiality agreement to not follow up with any contractors, insurance companies, or building owners. This is not something to simply accept from Minkow. Ernst clearly did not perform a thorough audit and did not perform the necessary …show more content…
4. There could have been several factors to that motivated Minkow to return back to his evil ways. He probably enjoyed the attention or missed the adrenaline rush of committing fraud. He also probably thought that by gaining so much trust from people after he was released from jail that he would not be suspected of fraud again – especially since he became a preacher afterwards. 5. By becoming a preacher and becoming a part of the Fraud Discovery Institute, he was trying to satisfy stage 4 and 5, law and order and social contract, respectively. He wanted to emphasize the morality of law by becoming a part of fraud investigation. By becoming a preacher he seemed to be motivated by upholding the basic rights and values of the community. Ultimately, his need to go back to his fraudulent ways is stage 2 of satisfying one’s own needs. Whether his motive was to make more money, satisfy an adrenaline rush, or anything else, it was in his own self-interest.

5-4: Client and Risk Assessment 1. It is very important for auditors to evaluate business risk before deciding whether to accept a new client. By evaluating management and its reputation first, auditors can make a decent inference about what the culture is like at the client’s company and how morally and ethically sound it is. It is important to make these decisions first because once the engagement letter is signed, the audit must be completed. Auditors want to know

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