Communications between Predecessor and Successor Auditors: Assignment

There were two external auditors mentioned in the case that dealt with ZZZZ Best. The first was not a firm that was included in the Big Eight accounting firms at the time. George Greenspan was the sole practitioner who performed the first full-scope independent audit for ZZZZ Best. Greenspan insisted that he had properly audited Minkow’s company, and testified that while planning the audit he had performed various analytical procedures to identify unusual relationships in ZZZZ Best’s financial data. Greenspan’s procedures reportedly included comparing ZZZZ Best’s key financial ratios with its industry norms. Greenspan identifies “unusual relationships” but does not go into detail in order to explain these unusual relationships. This shows that Greenspan did not show enough professional skepticism while conducting the audit and just blew off these unusual relationships. Also Greenspan testified that he had obtained and reviewed copies of all key documents that pertained to the false insurance restoration contracts. It would have been hard for Greenspan to uncover the fraud through the contract paperwork because Minkow and Morze went through such great detail in creating false documents in order to cover the false contracts, but finer details were overlooked by Greenspan. A journalist found one of these finer details which caused the domino effect leading to the destruction of ZZZZ Best. This shows that the first auditor,

Read the auditor’s report included in the annual report of the company and explain its purpose. Identify the name of the auditing firm.

Refer to the Dow Chemical financial statements for 2008 in answering the following: 1. Who are Dow’s external auditors? Describe the two opinion letters that Dow received for 2008. In your own words, explain what these opinions mean. Why are the opinions dated several weeks after Dow’s year end? 2. Use a spreadsheet to construct common-size income

e. Who are General Mills external auditors? Describe the two "opinion" letters that General Mills received in 2006. In your own words, what do these opinions mean? Why are both opinions dated several months after General Mills' year end?

3. Considering your response to questions 1 and 2, do you believe that the going- concern uncertainty was warranted? Do you believe that Deloitte & Touche should have issued a going- concern opinion prior to 2008?

1. What audit procedures that, if employed by Ernst & Whinney during the 1981 USSC audit, might have detected the overstatement of the leased and loaned assets account that resulted from the improper accounting for asset retirements?

Elizabeth best made Steve prepare the weekly schedule for the inspectors so that the time was well managed and that there would not be any uncertainty in it. The field reps had to be present at a particular inspection site at a particular time and had to visit a set number of sites in a day. This made sure that the field reps would manage their time in an effective manner. Their travel vouchers were thoroughly scrutinized and reimbursement was made only after it was initiated by Elizabeth best, this ensured that they would complete their work so as to get their reimbursement.

Background: Auditors have historically been more concerned with overstatements than understatements of earnings. However, recent SEC rulings suggest that auditors need to also be concerned about understatements of earnings, particularly when they are used to manipulate earnings in future periods. Actors: Oak Industries CEO, CFO, and controller (Group 4 – Trine Juliussen, Sang Uk Jung, Laura Platler)

c) Given your answers in parts (a) and (b) , state the appropriate audit report from the following alternatives (if you have not decided in one level of materiality in part (b), state the appropriate report for each alternative materiality level):

3. What potential implications arise for the accounting firm if they issue an unqualified report without the going-concern explanatory paragraph?

In 2012, PricewaterhouseCooper (PwC) was fine by AADB The Accountancy & Actuarial Discipline Board, financial regularity authority in United Kingdom, for wrongly reporting that J P Morgan have complied with statutory requirement. This negligence in

The ZZZZ Best case was such that management set out to conceal the fraud from the Securities and Exchange Commission, their clients and investors, and the auditors engaged to conduct the audits of their public financial statements. The foremost question is, should said auditors be held accountable for their failures in cases where management goes to excessive lengths to purposely conceal such fraudulent activities from the auditors. The

B. clearly state audit objectives for, and the delegation of, authority to the maintenance and review of internal controls.

Read the auditor’s report included in the annual report of the company and explain its purpose. Identify the name of the auditing firm.

What factors likely contributed to the oversights made by Ernst & Young auditors during the 2004 AA Capital engagement? Identify measures that audit firms can implement to minimize the likelihood of such oversights on audit engagements.