1. What is auditor independence, and what is its significance to the audit profes- sion? Based on the case information, do you believe that Andersen violated the second general standard? Why or why not? 2. Refer to the responsibilities principle of Generally Accepted Auditing Stan- dards (GAAS). Given the reluctance of WorldCom’s management team to communicate with Andersen, do you believe that Andersen exercised due care and professional skepticism in completing the audit? Why or why not? 3. In terms of audit effectiveness and efficiency, briefly explain the difference between substantive analytical procedures and substantive tests of details. Do you believe it was appropriate for Andersen to rely primarily on sub- stantive analytical procedures? Why or why not?
1. What is auditor independence, and what is its significance to the audit profes-
sion? Based on the case information, do you believe that Andersen violated
the second general standard? Why or why not?
2. Refer to the responsibilities principle of Generally Accepted Auditing Stan-
dards (GAAS). Given the reluctance of WorldCom’s management team to
communicate with Andersen, do you believe that Andersen exercised due
care and professional skepticism in completing the audit? Why or why not?
3. In terms of audit effectiveness and efficiency, briefly explain the difference
between substantive analytical procedures and substantive tests of details.
Do you believe it was appropriate for Andersen to rely primarily on sub-
stantive analytical procedures? Why or why not?
4. Consult Paragraphs 14 and A8 (in Appendix A) of PCAOB Auditing Standard
No. 5. Provide an example of both a preventive control and a detective control
that could address the risk that a fraudulent top-side
could be made by a member of management.1. What is auditor independence, and what is its significance to the audit profes-
sion? Based on the case information, do you believe that Andersen violated
the second general standard? Why or why not?
2. Refer to the responsibilities principle of Generally Accepted Auditing Stan-
dards (GAAS). Given the reluctance of WorldCom’s management team to
communicate with Andersen, do you believe that Andersen exercised due
care and professional skepticism in completing the audit? Why or why not?
3. In terms of audit effectiveness and efficiency, briefly explain the difference
between substantive analytical procedures and substantive tests of details.
Do you believe it was appropriate for Andersen to rely primarily on sub-
stantive analytical procedures? Why or why not?
4. Consult Paragraphs 14 and A8 (in Appendix A) of PCAOB Auditing Standard
No. 5. Provide an example of both a preventive control and a detective control
that could address the risk that a fraudulent top-side adjusting journal entry
could be made by a member of management.
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