Lincoln Case
Taylor Albinson
Dr. Shapeero
Auditing
Lincoln Savings case
3.) The auditor’s examination is affected since the related party transactions were not done legally. They showed that the company had significantly more assets than in reality. The auditor should check the cash balances with the bank this would help identify what the total balance is with the accounts. You would then be able to identify whether the amount recorded is higher or lower than the actual amount.
4.) Control environment is the component of internal control that includes the set of standards, processes, and structures that provides the basis for carrying out internal control across the organization. The component also includes the “tone at the top” regarding the importance of internal control and the expected standards of conduct. The people at high level positions did not do anything and just signed off on everything that Keating sent their way which shows really poor controls.
6.) Arthur Young should have checked the existence (occurrence) since not everything that was recorded happened and not everything was at the correct balance. They also should have checked the valuation and allocation. This is because the amount of cash was significantly overstated. Arthur Young also should have checked presentation and disclosures since in related party transactions there should be footnotes.
7.) I do not believe the relationship was proper you are required to be independent. Atchinson should not interface with Arthur Young’s auditors. The reason behind it is he would become no longer independent and compromise the audit. He could affect the decision in a certain way and the auditor would not be able to do their job properly.
Dr. Shapeero
Auditing
Lincoln Savings case
3.) The auditor’s examination is affected since the related party transactions were not done legally. They showed that the company had significantly more assets than in reality. The auditor should check the cash balances with the bank this would help identify what the total balance is with the accounts. You would then be able to identify whether the amount recorded is higher or lower than the actual amount.
4.) Control environment is the component of internal control that includes the set of standards, processes, and structures that provides the basis for carrying out internal control across the organization. The component also includes the “tone at the top” regarding the importance of internal control and the expected standards of conduct. The people at high level positions did not do anything and just signed off on everything that Keating sent their way which shows really poor controls.
6.) Arthur Young should have checked the existence (occurrence) since not everything that was recorded happened and not everything was at the correct balance. They also should have checked the valuation and allocation. This is because the amount of cash was significantly overstated. Arthur Young also should have checked presentation and disclosures since in related party transactions there should be footnotes.
7.) I do not believe the relationship was proper you are required to be independent. Atchinson should not interface with Arthur Young’s auditors. The reason behind it is he would become no longer independent and compromise the audit. He could affect the decision in a certain way and the auditor would not be able to do their job properly.