Deloitte Audit Case

Material misstatement shall be treated and assessed by the auditors as significant risks. And the auditor shall gather an understanding of the entity’s

N.P.Rothbard (2001) defined engagement “as a psychological presence with two key mechanism, attention and absorption”.

The mission of the PCAOB is to oversee audits of public corporations to protect the interests of the investor and ensure the audits are conducted

The PCAOB is the public accounting oversight board created by the Congress via the Sarbanes-Oxley Act. It appears the PCAOB has laid the groundwork to effectively monitor and review the public accounting

The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board (PCAOB) to assume the responsibility of overseeing the auditors of public companies. The PCAOB is a private-sector, non-profit corporation. It was established to "protect the interests of investors and further the public interests in the preparation of informative, fair, and independent audit reports". (The PCAOB) Although the PCAOB is a private sector organization, it has many government-like regulatory functions. The PCAOB was created in response to an increasing number of accounting restatements by public companies during the 1990s and a series of recent high-profile scandals like Enron and WorldCom. Prior to the PCAOB, the audit industry was self-regulated

1.1/1.2/1.3 – Requires me to describe what is employee engagement and how does it differ, if at all, from related concepts like employee involvement, employee participation and employee consultation? Also how far is employee engagement something which is genuinely new and distinctive, or is it merely a repackaging of old and well-established ideas?

“Sarbanes-Oxley Act of 2002” mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession” (U.S. Securities and Exchange Comissions).

Dismissing Smith based solely on a poor attitude without providing evidence that she is hurting departmental job performance or other employees could end the company up in court facing a wrongful discharge suit. It is the manager’s responsibility to interpret and enforce a disciplinary process or policy in a fair and consistent manner. Trent needs to start by determining a plan of action, one that balances the business necessities against worker rights and documenting complaints about lack of professionalism, cooperation, and teamwork. Disciplining can be a gray area without clarifying the rules and pre-determining the viable consequences for violations that are reasonable and defendable.

SUBJECT: Beginning the Audit Report (Engagement letter, Engagement checklist, Outline of timeframes and milestones of the audit)

The creation of the PCAOB was necessary and will help prevent another accounting scandal which cost investors billions of dollars and a lot of confidence in U.S. businesses. The PCAOB “oversee the audits of public companies in order to protect investors and the public interest by promoting informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers, including compliance reports filed pursuant to federal securities laws, to promote investor protection”. (pcaobus.org)

Thank you so much for spending some time to speak to us about your experiences with Deloitte at the case workshop. It was truly a pleasure meeting you, as I enjoyed listening to your advice in regards to the case interview.

At the turn of the 21st century, more fraud and scandals ensued, therefore more actions were required in order to crack down on the issues surrounding financial reporting. The Sarbanes – Oxley Act (SOX) 2002 was established, in order to enforce corporate governance rules for publicly traded companies (Schroeder et al, 2011). The SOX added more constraints on corporations, making executives and managers more accountable for their actions and financial reporting. The SOX also, established the Public Company Accounting Oversight Board (PCAOB), which holds the responsibility of setting auditing standards and practices. As a result of these actions, there were fewer scandals and unethical behavior; however, they still exist in one form or another.

The audit engagement team’s responsibilities to determine if an engagement is a high-risk or normal-risk engagement are the same. They both use the audit risk model to determine the inherent and control risk to detect if the account contains errors that could be material when combined with errors in other accounts and detection risk that the auditor will not detect material errors. By using the audit risk model, it would help in determining the substantive audit procedures needed for testing. The factors that prompted Sullivan to designate 1997 audit a high-risk engagement are the subjective nature of the earned value method; Paragon’s large unbilled revenues; the aggressive revenue recognition practices advocated by Golden Bear management; severe weaknesses in Paragon’s cost accounting system. These factors should have alerted Sullivan and his subordinates to be particularly cautious.

Engagement is more than just happiness. It involves commitment and helping others accomplish goals, whether it’s personal or for work. When people are engaged they do everything possible to complete that task, take full responsibility of the projects that is at hand, stay positive, deliver great work, and go above and beyond to make sure that they do great at the goal that was set. Engagement is the most important factor needed of any person for the achievement of any company in order to succeed.

In auditing there are “good” engagements and there are “bad” engagements. A good engagement is one where you have a strong working relationship with the client and act as a cohesive unit striving towards a common goal. Whereas an engagement may be bad if client is difficult to work with or if you feel as though they are almost trying to impede your progress. Another aspect is that good clients have all these extra perks that auditors can use and bad clients do not. Justin Truong, a Masters of Science in Accounting student from Cal Poly SLO and future PwC auditor, stated in an interview that “often times the most sought after clients are those with the most extraordinary benefits... they will allow you eat at their cafeteria