Molex Financial Problems

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1. Why does Molex have to hire external auditors?
The major reason for firms to hire external auditors is to help the control of conflict of interest between firm managers, investors and shareholders. External auditors help you determine whether companies are in compliance with all applicable Internal Revenue Service rules. Under the Sarbanes-Oxley Act, a public company must hire an external audit team to review their accounting procedures and their financial statements. While internal auditor checks the organizations internal control systems, their effectiveness and the business processes, the external auditor checks the financial statement of the business. Molex hire external auditors to look at their financial states and to receive an objective assessment. It is possible that Internal auditor might present a biased view as it would need to work closer with the management while the External auditor who have no interest in company will likely to provide fairly judgment and unbiased report.

Under the Sarbanes-Oxley Act, a public company must hire an external audit team to review their accounting procedures and their financial statements. While internal auditor checks the organizations internal control systems, their effectiveness and the business processes, the external auditor checks the financial statement of the business. Molex hire external auditors to look at their financial states and to receive an objective assessment. It is possible that Internal auditor might present a biased view as it would need to work closer with the management while the External auditor who have no interest in company will likely to provide fairly judgment and unbiased report.

2. What was the financial reporting problem at Molex? How would the correction of the problem be recorded in Molex financial statements?   What factors do you think influenced Molex management’s decision not to raise the issue with the auditors? The factors that I think influenced Molex...
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