case 1 Essay

Question #1: How would Sheryl Sandberg’s leadership style be described based on the four behavioral leadership styles?

* Common history shows that prior to PCAOB, the accounting industry was self-regulated through the American Institute of Certified Public Accountants (AICPA). Create an argument that the public is either better or worse off since PCAOB assumed the

3. (10 pts.) Enron will be an example of a dysfunctional company for many years to come. It was clearly a company riddled with fraud and excess and its conduct drove it into bankruptcy. The text argues that individual behavior was not at the core of Enron’s problems. What were the problems with this corporation from an organizational architecture point of view?

Arthur Andersen (AA) contributed to the Enron disaster when it has failed to the management by failing to have Enron establish and enforce its own internal control. There has been flaws to AA‘s internal control. There has been assumption that AA partners were too motivated by revenue recognition thus, overlooking several criteria when providing their services to Enron. Additionally, AA also recognised the retention of audit clients as vital and a loss of any clients would be disadvantaged to an auditor’s career. In AA internal control, the person who is able to make most of the decisions is the person who is most concerned about the revenue or losses of the client’s company.

Elder, A. A., Beasley, M., & Elder, R. J. (2014). Auditing and assurance services (15th ed.). Upper Saddle River, NJ: Pearson.

Your paper this week should explain in your own words the responsibilities of auditors in understanding the security risks facing their organization with the use of cloud services. How has auditing's role changed as we've moved from client-server architecture to the cloud model? Include steps auditors must take to assess the level of compliance of the CSP with standards. Provide examples of how auditors assure due diligence when it comes to security and risk.

Assuming that the end result is an unqualified audit report, outline the primary responsibilities of the audit firm after it issues the report in question.

2. Evaluate Andersen’s claim that their problems on the Enron audit were due to a few “bad partners” in the organization. If you disagree with this claim, discuss what you think were the root causes of the problem. I do not believe Andersen’s claim. I believe that they had full knowledge of what was happening at Enron. I believe that Enron was paying off the auditors (staffers) in the Houston office. I believe they were

“Keystone Computers & Networks, Inc. (KCN) is a company that sells and installs computer workstations and networking software to business customers. The CPA firm of Adams, Barnes & Co. has audited the financial statements of KCN for the past three years. The case illustrates selective audit planning working papers that were prepared by the staff of Adams, Barnes & Co. for this year’s audit.” I will be listing the order in which I would perform this audit and I will decide if I should select the client and focus on the key audit objectives while applying the audit risk model.

Public companies issuing securities, public accounting firms, and firms providing auditing services whether they are domestic or foreign must comply with Sarbanes-Oxley. (Sarbanes-Oxley Act Section 404, 2002) Additionally, publicly traded companies with a market capitalization greater than $75 million must comply with these new rules. (Don E. Garner, 2008) A company’s management is required to provide an external auditor with all financial statements for the current review period. Upon reviewing these statements the auditor issues a report classified as unqualified, unqualified with explanation, qualified, adverse, or disclaimer based on what they find or do not find. All public companies reports are available on the Securities Exchange Committees website, below is a sample of what this report looks like. You can imagine what a relief this was for investors, to be able to search any company and find statements solidifying their prospective investment.

Enron – Enron is partially responsible for the crisis of confidence, because they committed the fraud via the special purpose entities. Because of the three percent rule, Enron was able to put lots of its liabilities onto those off-balance sheet entities. Also, Enron did not have adequate financial statement disclosures. Many of the top employees at Enron were able to “realize” an extraordinary profit within matters of a couple months because of the fraud. Additionally, Enron abused the mark-to-market accounting method for its long-term contracts. All of these fraudulent activities caused Enron’s profits to be overinflated.

c. The full impact of Enron’s collapse on customers isn 't explored within the case. Students might speculate that some customers that had signed semi-permanent contracts with Enron for the delivery of bound commodities were left while not a reliable supply.

2. As a member of Interco’s board, are you persuaded by the premiums paid analysis (Exhibit 10) and the comparable transactions analysis (Exhibit 11)? Why?

3) Analyze the legal responsibility a forensic accountant has while providing service to a business.

1. The Enron debacle created what one public official reported was a “crisis of confidence” on the part of the public in the accounting profession. List the parties who you believe are most responsible for that crisis. Briefly justify each of your choices.