Parmalat Case Answers Essay

1225 WordsApr 18, 20155 Pages
Parmalat Finanziaria, S.p.A. Case Brief Summary: Case Questions: 1). Identify key factors or circumstances that complicate an independent audit of a multinational company One thing to always keep in mind is that the culture is different across the globe. Auditors of multinational companies may face cultural and communication barriers with their clients, which can complicate audit tasks. We also have to account for different currency across different countries and any transactions involving them. One has to closely monitor the exchange rates to avoid overstating or undermining revenue. We also have to consider different accounting and financial reporting treatments for the same transactions and accounts. Auditor’s role is to ensure that…show more content…
Rank order these risk factors from the most important to the least important. 1. 35 bond issues 2. Obtaining large amounts of loans 3. Retained primary auditor 4. Large amount of SPE’s 5. Account “999” 6. Family controlled business 4). According to generally accepted auditing standards (GAAS), how should the responsibility from performing “shared audits” be allocated to the accounting firms involved in such engagements? Auditors should follow GAAS on their portion on “shared audits”. Under Au section 543, the primary auditor can elect to take responsibility for the other auditors. If this is the case they should be sure that the work of the other auditors follows GAAS. If they elect not to they a note should be made of the work that the auditors did. 5). Do you believe that the individual national practice units of international accounting firms’ global networks should face joint and several liabilities? In our opinion, the individual national practice units of international accounting firms’ global networks should face joint and several liabilities. The efforts put forth by international accounting firms, such as Deloitte and Touche and Grant Thornton, to present themselves as unified, worldwide organizations backfired dramatically in one major respect. Because of this, a growing number of plaintiffs at this time began to name a given firms’ entire global organization as a defendant instead
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