Cbi Holdings Inc

843 WordsSep 24, 20124 Pages
CBI Holdings Case 2.6 Background CBI Holding a New York based firm serves as the parent company for several wholly owned subsidiaries. Ernst and Young became CBI’s independent auditors and performed audits for CBI’s financial statements from 1990 through 1993. Ernst and Young failed to investigate the alleged advances and conform to clients facts which may include investigating credit limit and analyzing vendor’s payable accounts. Instead the auditors record in their work papers the client’s feeble explanation for the advances. After investigations from a former CBI accountant and CBI controller, Ernst and Young have determined that CBI auditors had failed to detect unrecorded liabilities because they had failed to properly perform…show more content…
With respect to (b), consideration should be given, among other things, to the time elapsed since the financial statements were issued.” (AU 561 – .09a) states that, “If the auditor has been able to make a satisfactory investigation of the information and has determined that the information is reliable: (i) The disclosure should describe the effect the subsequently acquired information would have had on the auditor 's report if it had been known to him at the date of his report and had not been reflected in the financial statements. The disclosure should include a description of the nature of the subsequently acquired information and of its effect on the financial statements. (ii) The information disclosed should be as precise and factual as possible and should not go beyond that which is reasonably necessary to accomplish the purpose mentioned in the preceding subparagraph (i). Comments concerning the conduct or motives of any person

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