ratios over the period of 1984 to 1987 would have resulted in red flags. Crazy Eddie’s change in assets between this period is one red flag that an auditorshould have noticed. Short-term investments had a zero balance until 1986 when it dramatically increased to 21.1 and then dramatically increased again...
such differences could be troublesome for auditors of transatlantic entities containing parents or subsidiaries in each continent, where legal resource and allowable liability limits differ.
the purpose of this article are to discuss the abandoing of interpretation 101-16/ describe some effects of...
decreasing. How was Crazy Eddie receiving all this money if sales were down? Extremely high A/R turnover rates are and indicator of credit and collection policies that are too restrictive.
2. a) Falsification of inventory count sheets (reperformance)
A corrective internal control measure to establish existence...
are and indicator of credit and collection policies that are too restrictive.
"Where were the auditors?" was a question posed repeatedly by investors, creditors, and other interested parties when the public learned of the Crazy Eddie fraud. Being an auditor, to identify specific audit procedures that...
during 1980s. Discuss how changes in an audit client’s industry should affect audit planning decisions. Relate this discussion to Crazy Eddie.
4. Explain what is implied by the term lowballing in an audit context. How can this practice potentially affect the quality of independent audit services...
3. How should changes in the audit client’s industry affect audit planning decisions, especially in relation to Crazy Eddie?
4. (a) What is implied by the term low-balling in an audit context?
(b) How can this practice potentially affect the quality on independent audit services?
salespeople to pressure the customers to buy product warranties. Many of the repair costs that Eddie paid under these warranties were recovered by the company from manufacturers that had issued factory warranties on the products (RED FLAG). As the firm began to grow, Eddie became a secondary supplier, purchasing...
Crazy Eddie collapsed following allegations of extensive financial . wrongdoing by Antar and his associates. Shortly after a hostile takeover of the company in November 1987,the firm's new owners discovered that Crazy Eddie's inventory was overstated by more than $65 million. This inventory shortage had...
industrial operations to curbside collection. This company had become synonymous with many different kinds of disposal services that allowed for the company to grow and grow with a solid base over the course of twenty-eight years. Finally in 1996, the company reported total assets of almost $20 billion with...
inventory and this downward trend should have been a huge red flag. These red flags show a companywho is losing market share because of the expansion of the electronics market in the late 1980’s.
Analysis of key ratios continues the trend of red flags for an auditor. The first ratio that looks a bit...
accounting fraud and auditor legal liability
c a S eS inc lu de d in t hiS Se ction
4.1 Enron Corporation and Andersen, LLP
Analyzing the Fall of Two Giants
. . . . . . . . . . .
4.2 Comptronix Corporation 4.3 Cendant Corporation
. . . . . . . . . . . . . . . . . . . . . .
present the audit risk model, which is used to determine the nature, timing, and extent of audit procedures. Describe the components of the model and discuss how changes in each component affect the auditor's need for evidence.
The Audit Risk Model (ARM) is defined as:
a. Inherent Risk is the auditor’s...
organizations. Identify complete name of each organization. History of Establishment of GAAP. Discuss CAP, APB, FASB, and related pronouncements. (AICPA adapted). Accounting Principles. Define accounting principles. Discuss sources of GAAP. (CMA adapted). Standard Setting. Describe why there is political action...
Trading (APT), Learning Team A would like to discuss the implications of the Sarbanes-Oxley (SOX) legislation. This memorandum provides a brief history of SOX¡¦s creation, explains the relationship amongst the FASB, SEC and PCAOB, describes the pros and cons of SOX, assesses the impacts of SOX, and lists...
corporate governance are the stockholders (owners), board of directors, audit committees, management, regulatory bodies, and both internal and external auditors.
2-2. In the past decade, all parties failed to a certain extent. For detailed analysis, see exhibit 2.2 in the chapter and repeated here:
present the audit risk model, which is used to determine the nature, timing, and extent of audit procedures. Describe the components of the model and discuss how changes in each component affect the auditor’s need for evidence.
The audit risk model is used to determine the nature, timing, and extent of...
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R REAL ISSUES & CASES
United States Surgical Corporation
The Fund of Funds, Ltd.
Crazy Eddie, Inc.
ZZZZ Best Company, Inc.
Gemstar-TV Guide International, Inc.
New Century Financial Corporation
Recommendations requires listed companies to “lay solid foundations for management and oversight.”
a) Discuss what this principle means in relation to a company with which you are familiar
(explain the company’s legal entity, industry and country). (12 marks)
b) Discuss what is the point of having...
fundamental issues that motivate interest in each of the main subjects of contemporary research. In addition to a general introduction to business ethics, individual volumes cover key ethical issues in management, marketing, ﬁnance, accounting, and computing. The books, which are complementary yet complete in...