Audit

evidence to verify information from the client. Ernst & Whinney failed to meet this obligation when they did not require corroboration of the insurance restoration contracts from independent third parties. When Ernst & Whinney resigned from the audit engagement,they had a professional obligation to disclose the reason for the withdrawal. Due care requires that an auditor discharges professional responsibilities with competence and diligence. It imposes the obligation to perform professional services

CBI Holdings Case 2.6 Background CBI Holding a New York based firm serves as the parent company for several wholly owned subsidiaries. Ernst and Young became CBI’s independent auditors and performed audits for CBI’s financial statements from 1990 through 1993. Ernst and Young failed to investigate the alleged advances and conform to clients facts which may include investigating credit limit and analyzing vendor’s payable accounts. Instead the auditors record in their work papers the client’s

was aware of the accounting actions that were taken to meet revenue and profit goals. Xerox's auditors -KPMG complied with management's request related to accounting practices in order to maintain relationship with Xerox and to protect the audit and non-audit fees to be received between 1997 and 2000. In response to the SEC's complaint, Xerox Corporation agreed to pay a $10 million penalty and to restate its financial results for the years 1997 through 2000. In June 2003, six Xerox senior executives

the broker dealer operations of Madoff Investment securities. The lack of resources also affects the ability of the company to deal with financial and credit crisis (Hornuf & Haas, 2014). Most importantly, the company lacked regular examination of audit procedures in analyzing the fraudulent actions. The regulatory oversights have various gaps in regulation that allowed investment and broker dealers to form unclear

capital expenditures. The internal auditor discussed the mistreatment with the CFO (chief financial officer), Scott D. Sullivan, and the company 's controller, David F. Myers. Prior to or on June the 12th, the matter was reported to the head of the audit committee of WorldCom’s board of directors, Max Bobbitt, who then asked the company 's current outside auditor, KPMG, to investigate. Prior to KPMG 's tenure as an outside auditor, Arthur Andersen had served as WorldCom 's outside auditor since 1989

services contributes less than 5% of revenues paid to the auditing firm. Also, a public accounting firm may provide these non-audit services along with audit services if it is pre-approved by the audit committee of the public company. The audit committee will disclose to investors in periodic reports its decision to approve the performance of non-audit services and audit services by the same accounting firm. This requirement to disclose to investors is likely to inhibit auditing committees from approving

subpoenaed that the audit firm should give the documents. References PCAOB Rules Section 5. Investigations and Adjudications. Rule 5105. N.p., n.d. Web. Retrieved April 7, 2014. http://pcaobus.org/Rules/PCAOBRules/Pages/Section_5.aspx#rule5105 Audit Evidence. Auditing Standard No. 15. PCAOB, n.d. Web. Retrieved February 17, 2014. http://pcaobus.org/Standards/Auditing/Pages/Auditing_Standard_15

Assurance Handbook 2012, section 290) Nevertheless, John’s independence was somehow violated due to the conflict of opinions within the audit team. Taking the unfaithful conclusion in the replacing report affects the professional performance of the whole audit team. The second ethical issue involved in this case is whether the audit team embodies integrity in their audit performance. APES 110 s110 says that the principle of integrity imposes an obligation on all Members to be straightforward and honest

From 2005 to 2010, the IRS earned about $14.7 billion annually by conducting audits. By fiscal year 2015, that number had dropped to $7.32 billion because of IRS budget cuts, according to CNBC’s Kevin McCoy. “Our natural reaction to that kind of statistic is that fewer audits is a good thing,” Attorney Joe Garza said. “The truth is more a mixed bag, though. The lower audit count means the IRS has lost funding and therefore can’t track down corporations and individuals who are breaking the law.” IRS

External auditors play important roles in delivering credibility of public financial statements to stakeholders outside of the audited firms (The Institute of Chartered Accountants in Australia, 2008). Published financial statements can be used by stakeholders as a basis for evaluating the financial position of firms, analyzing the performance of management, or making investment decisions (International Organization of Securities Commissions, 2002). Published financial statements will also be used