Essay North Face

603 Words May 28th, 2012 3 Pages
North Face, Inc.
1. Should auditors insist that their clients accept all proposed audit adjustments, even those that have an "immaterial" effect on the given financial statements? Define your answer.
I think auditors should strongly insist that their proposed adjustments should be made. If the company makes the proposed adjustments, it would seem to allow for a lesser probability for misstatements to occur. Even though an adjustment may seem immaterial for one year's statements, a combination of these immaterialities over a 2-3 years timeframe could easily add up to be important, if not detrimental to the company's existence. In this case, luckily, North Face was able to recover from the fraudulent activity.

2. Should auditors
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This also aids in future audit procedures. When Deloitte modified the 1997 workpapers but failed to document the revisions that undermined the first objective. They altered the original workpapers, which, in part, deleted original findings by the audit team for the 1997 audit pertaining to the barter agreement. The changes to the 1997 workpapers directly affected the decisions made on the 1998 audit. The auditors of the 1998 audit depended on the decisions from the 1997 audit that created the improper handling of the barter transaction recorded in January 1998. 5. North Face's management teams were criticized for strategic blunders that they made over the course of the company's history. Do auditors have a responsibility to assess the quality of the key decisions made by client executives? Defend your answer. When deciding on whether or not to take on a new client, firms interview the key decision makers to gauge their expertise in the industry for which the company operates. The auditors use that information to determine the competency on the top executives. With that being said, I believe that auditors should assess only those decisions made that would directly affect the reporting. For example, if a furniture maker decides to purchase more than 50% of fabrics from a new

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