Jamaica Water Properties Case Study

Good Essays
Abigail Rockwell
Due Date: February 15, 2014
Jamaica Water Properties Case Study

During a time in our recent history when greed and self promotion was the benchmark that most financial and managerial directors of companies, both public and private, seemed to strive for, David Sokol stands out above the crowd. Instead of looking to further his own self-image, career, or standing, instead of taking what most people would view as the easy road, Mr. Sokol did the right thing. He chose ethics, morals, and a straight compass to guide his career. Was it an easy road? No, but it was the right one. Would I be able to do the same thing? I would hope so. Although we never know with 100% certainty what we would do in a specific situation, I
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One way to do that is to reduce the risk of personal relationships between the client personnel and members of the audit engagement team. Close, personal relationships make it easier for the audit team to overlook areas that might need further investigation. Thankfully, the Sarbanes-Oxley Act and SEC Provisions have already addressed the issue of an accounting firm/auditor’s independence. As long as the firm adheres to these rules and requirements, their risk is minimized. Some of these measures include:
Partner Rotation: Required by the Sarbanes-Oxley Act, the SEC independence rules require the lead and concurring audit partner to rotate off the audit engagement after five years. Additionally, the SEC also requires that there be a five year “cooling off” period before the partner can return to that audit.
Establishment of an Audit Committee so that there is a buffer between any disagreements between management and the auditor.
Maintaining Auditor independence through the exclusion of those with potential direct and indirect financial interest in the client from working on the audit.

It was the lack of independence between JWP and Ernst & Young that led to many of the issues that were not caught,
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