Grant Thornton, Llp Is The Accounting Firm That Was Hired

881 WordsMar 18, 20174 Pages
Grant Thornton, LLP is the accounting firm that was hired by the First National Bank of Keystone to complete an outside audit. After being found negligent in their performance of the Keystone Audit, Thornton appealed the final decision and order from the Comptroller of the Currency that required the firm to pay $300,000 in civil penalties for reckless failure to meet the Generally Accepted Auditing Standards ("GAAS"). Grant Thornton also appealed the Comptroller 's cease and desist order that mandated that the firm would need to comply with several principles whenever they audit depository institutions. Keystone was initially a small community bank that provided banking services to clients primarily located within the McDowell County in…show more content…
It is because of Keystone’s poor management quality, overall condition, and questionable bank statements that the OCC required the bank to enter into a formal agreement that included retaining a nationally recognized independent accounting firm. When Grant Thornton was contracted in 1998 to carry out an external audit, Thornton knew that the bank had significant accounting problems and was aware that the federal regulatory authorities were skeptical of the bank. In 1999, the accounting firm gave a favorable impression of the bank’s income statements for 1997-1998 and several months later the OCC discovered that the bank committed fraud and was insolvent. This resulted in the closure of the bank. II. Holding Grant Thornton should be held liable for its reckless negligence because it ultimately prolonged Keystone bank’s ability to continue to partake in fraudulent activities. If the accounting firm would have held itself to GAAS, generally accepted as the minimum standard of professional conduct in performing an audit, Thornton would have known to exercise “heightened skepticism” during this high risk of fraud. Secondly, GAAS required written confirmations from third parties servicing assets in regards to a bank’s balance sheet. Not only did Thornton fail to obtain this written requirement, it also recklessly relied on an oral statement. GAAS also required in a high risk audit that monthly remittances of interest income on assets being serviced by

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