Grant Thornton, Llp Is The Accounting Firm That Was Hired

Good morning, your Honor. I am Theresa Pacholik and I am representing Group One. Please let me introduce my colleagues: Chelsea Rowell, Miles Brown and Kimberly Hudson. We come in front of you today with our clients, the Office of Comptroller of Currency (OCC) to show why the court should uphold the decision of the district court against Grant Thornton LLP (Grant Thornton). We will discuss the negligent actions performed during the audit conducted by Grant Thornton and how their unsafe and unsound practices impacted First National Bank of Keystone (Keystone Bank) regulators, shareholders and the public.

For both of those years, E&Y's opinions stated that E&Y conducted its audit in accordance with Generally Accepted Accounting Standards (GAAS) and that, in the opinion of E&Y, the consolidated financial statements presented fairly, in all material respects, the financial position of CBI. During the 1992 and 1993 audits E&Y had discovered numerous disbursements made by CBI in the first few weeks of the next fiscal year that were unrecorded liabilities. These disbursements included payments to the company’s vendors that had been labeled as “advances” in the company’s accounting records. The explanation that was given by the CBI’s personnel was that “when CBI is at its credit limit with a large vendor, the vendor may hold an order until they receive an advance, CBI then applies the advance to the existing A/P balance”. E&Y auditors readily accepted the explanation and chose not to record the items as unrecorded liabilities. In fact, the financial statements prepared by E&Y did not fairly present CBI's financial position because E&Y did not detect certain unrecorded liabilities when it performed the audits. Although Ernst & Young auditors had discovered a lot of red flags, suspicious activities and behaviors, unrecorded liabilities they did not properly investigate those activities, they didn’t require CBI to prepare appropriate adjusting entries for them and as a result, failed to notify CBI’s board of directors about the existence of all these

Good morning, your Honor. I am Theresa Pacholik and I am representing Group One. Please let me introduce my colleagues: Chelsea Rowell, Miles Brown and Kimberly Hudson. We come in front of you today with our clients, the Office of Comptroller of Currency (OCC) to show why the court should uphold the decision of the district court against Grant Thornton, LLP. We will discuss the negligent actions performed during the audit conducted by Grant Thornton and how their unsafe and unsound practices impacted Keystone Banks’ regulators, shareholders and the public.

According to records found, representatives from Grant Thornton attended a meeting on December 1998 between the OCC and management of Keystone Bank. This meeting was in regards to the findings and conclusions of the OCC’s 1998 report of examination. This meeting informed Grant Thornton of Keystone’s misstatement of about $90 million in assets. In addition to the misstatement the OCC discovered what appeared to be a deliberate mischaracterization of $760 million of the bank’s assets which calculated the bank’s risk-based capital for call reporting purposes. Due to the information given at the meeting Grant Thornton classified Keystone’s audit as a maximum risk audit (Grant Thornton LLP v. the OCC, 2008). In order for an auditing firm to properly prepare for an audit they must assess the risk and take into consideration whether it was caused by error or fraud. An auditor is required by the Generally Accepted Auditing Standards (GAAS) to obtain the proper knowledge of the business that is being audited so that it allows them to understand the transactions, events and practices that could have substantial impact on the financial statements of the entity. If an entity has a high detection risk, similar to Keystone Bank, the auditor is required by GAAS to “modify or expand procedures, particularly in critically important areas” so that an auditor is not satisfied with anything less than credible evidence (“Generally Accepted Auditing

Neo@Ogilvy LLC, WPP Group USA. The case was filed after a December 8, 2014 ruling. In this case, Daniel Berman was the finance director at Neo@Ogilvy from October 2010 to April 2013. As the finance director he made sure all financial and accounting procedures were done in accordance with GAAP. In his work, noticed there were some procedures being done that could lead to accounting fraud and decided to report these actions. As a result of reporting these actions to a senior officer he was terminated. Berman felt that he was wrongfully terminated in accordance with the Sarbanes-Oxley Act and Dodd-Frank Wall Street Reform and Consumer Protection Act. Dodd-Frank was created, “To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘‘too big to fail’’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.” (H.R., 2010, p.1) Now to get into some more detail of how this ties to

Previous to KPMG, Grant Thornton was Overstock’s auditor for an Interim period from March 2009 to November 2009. Based on the information published in the 8K, Overstock dismissed Grant Thornton due to a revision of a $785,000 asset that Grant Thornton wanted to amend in the company’s pervious 2009 quarterly filling and 2008 financial results. Overstock disagreed with Grant Thornton’s position, and unfortunately the timing of the situation could not have been worst considering the SEC filing deadline were approaching. Surprisingly, Grant Thornton retaliated Overstock’s comments affirming that they never took position as to whether Overstocks 2008 financial statements should be reinstated, since they did not issue an audit opinion for the 2008 financial. Furthermore, Grant Thornton clarified that they were engaged to review, not to audit, the company’s interim financial statements which consists primarily of performing analytical procedures

Carcello, Hollingsworth and Mastrolia tested whether PCAOB annual inspections result in higher quality financial reporting (Carcello, Mastrolia, & Hollingsworth, 2011). They compare abnormal accruals reported by audit clients before and after initial inspections by PCAOB (Carcello, Mastrolia, & Hollingsworth, 2011). If the inspections result in improved auditing, they expect to see less earnings management after the initial inspection (Carcello, Mastrolia, & Hollingsworth, 2011). For comparison purposes, they make the same observations before and after AICPA peer review inspections made prior to SOX (Carcello, Mastrolia, & Hollingsworth, 2011). They find a significant decrease in income-increasing abnormal accruals in the first and second years

As mentioned earlier, Grant Thornton mainly focused on Sports Direct’s internal operations such as accounting for Sports Direct’s acquisition activities and forward contracts for foreign currencies, the carrying value of inventories, disclosures to related parties, and revenue recognition (Sports Direct International Plc 2016, p.64). These were the primary audit risks identified by the auditors. But Grant Thornton failed to find out SD’s fraudulent practices regarding its undisclosed payments to Barlin Delivery Ltd. However, the auditor provided detailed description about the risky areas in SD’s accounting practices and made proper connections with all the relevant and accepted accounting standards. In addition to that, they made declarations about SD’s past performance in those risky areas and whether they have improved in the recent years or not. And finally, Grant Thornton also made attempts to find out if SD had taken any steps to deal with these risky accounting practices, and they also assessed the

On top of all that, Cardozo and Co, Inc.’s new CEO has requested for the accountant to not comply with summons or subpoenas of information related to the company. To analyze what the small accounting firm can be charged with or sued for, there are a few facts that need to be taken into consideration. While preparing the registration statement, the accountant discovered irregular entries he believed to be bribes that he ignored. There was also errors he did not discover, such as the overstatement of net sales and net profits. First, I will cover the common law liabilities, followed by the statutory liabilities, then explain the accountant-client

I was assigned to conduct an audit of the ending cash balances concerning two bank accounts, bank CDs, and petty cash for Temple Co. At first glance, I assumed that the large Citizens bank account had both high risk and high materiality, the TD account had medium risk along with low materiality, the CD had low risk and low materiality, and the petty cash was high risk and low materiality. Knowing this I conducted specific audit testing and questioned the bookkeeper along with the controller to ensure the validity of the amounts stated on the balance sheet.

Lehman Brothers executives and E & Y auditors are liable for the federal and state suits filed depending on the materiality of their involvement. For instance, Ong & Yeung (2011) says, “…regardless of whether technical compliance was achieved, a ‘colourable’ claim existed regarding Lehman’s failure to disclose its Repo 105/108 practice that rendered the firm’s financial statements materially misleading” (p. 101). Another factor identified, Ong & Yeung (2011) notes, “…colourable claims against the officers and directors of Lehman in connection with their failure to disclose the use of the practice and against its auditors for their failure to meet professional standards in connection with that lack of disclosure (p. 101). Criminal and civil (federal and state for both) charges can be brought against Lehman and E & Y. Jeffers states, “If Lehman’s CEO and CFO knew of the Repo 105 transactions and knew that

With the avalanche of accounting scandals that have rocked the public, people tend to have increasingly high expectation that auditors are accountable for detecting all frauds, while the standards require auditors to provide reasonable, but not absolute, assurance. The purpose of the report is to discuss the accountability of auditors in detecting fraud by analysing a $16.9 million fraud of Otago District Health Board (ODHB) perpetrated by Swann and Harford from 2000 to 2006. The report will explain the event, the fraud, the stakeholders, the role of auditors and the current situation.

  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 tests for reasonableness.

- Dysfunctional conflict: This situation was evident between Crosby and Palmer who operated from the strategic and operational sides respectively. Tensions arose between the two due to the inability to compromise over sharing resources and work out their differences.

The company was alleged to have engaged in fraudulent activity, but the external auditors were negligent to write a note on the issue. GAAP requires all material information should be fully disclosed in the notes sections. Since, it might have some future impacts on the financial performance of the company. The auditors did not fulfill the requirements of the full disclosure principles of GAAP. The health care fraud case is a major event that has effect on the public perception of the company. Therefore, the external auditors are expected to indicate the material issues relating the matter and their effects on the financial performance of the company.