Cbi Case Solution

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CBI Holding Company, Inc. Case Solution I. Summary A CBI Holding Company was a New-York based parent company for several wholly-owned subsidiaries. These marketed an extensive line of pharmaceutical products that were purchased from drug manufactures, warehoused in storage facilities and then resold to retail pharmacies, hospitals long-term care facilities and related entities. CBI’s chairman and president Robert Castello was the seat of the CBI‘s troubles and principal implementer of fraudulent schemes. When in 1991 he sold 48 % ownership to TWC, both companies agreed that TWC would have the right to take control of CBI in case of any so-called triggering events. Shortly after this deal in following 1992 and 1993 Castello and…show more content…
That will allow management to improve internal controls in bottlenecks and prevent this happening next time. 4) I suppose that an engagement partner could acquiesce to a client’s request to remove of the engagement team under circumstances for example when engagement team would be suspected in failing to maintain independence or when management would find out that engagement team demonstrates lack of expertise while conducting the audit. 5) The auditor exercises professional judgment when making the decision to accept a new client or to continue serving an existing client. To aid in making the judgment, auditing firms apply prescribed procedures to the potential client. Of the procedures, perhaps the most important deals with the integrity of management. The auditor 's business risk associated with a management that lacks integrity is difficult to overcome. Despite auditor 's business risk being high, an acceptable engagement risk may still be achieved. Audit risk can be adjusted such that the combination of entity 's business risk, audit risk, and auditor 's business risk yields an engagement risk that is sufficiently low. However, if management lacks integrity, adjusting the nature, timing, and extent of audit procedures performed on management assertions may not produce an acceptably low audit risk. In making a decision to continue a client, the

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