Find practice of materiality used by public accounting firms

Reference no: EM131175553

Assignment 1, Nextcard Inc

Read the case study titled Nextcard, Inc. Write a four to five page paper in which you:

1. Given PCAOB oversight of accounting firms and the AICPA Code of Conduct, discuss whether or not you believe that public accounting firms can successfully manipulate audit work papers and records of clients engaged in fraudulent activity.

2. Analyze the fraud risk factors presented during the 2000 Nextcard audit and how each should have impacted the audit procedures.

3. In the Nextcard case, discuss how Ernst Young motivation to destroy the audit work papers reconciles with its obligation to provide assurances to financial investors.

4. Assume the role of Oliver Flanagan in the case. Identify the actions you would have taken when Robert Trauger asked you to help him alter the 2000 Nextcard audit work papers. In answering this question, discuss alternative courses of action available to you.

5. Search the Internet for a public accounting firm that recently destroyed audit evidence related to a client. Identify the public accounting firm and evaluate the punishment that the firm received for the Professional Code of Conduct violation. Evaluate the severity of the punishment to determine whether you agree or disagree with the severity.

Assignment 2, North Face

Write a four to five page paper in which you:

1. The SEC sanctioned Richard Fiedelman for failing to document the changes that his subordinates had made in 1997 North Face work papers and for failing to exercise due professional care. Explain the SEC rationale in making each of these allegations.

2. Take a position on the severity of the SECs punishment of Richard Fiedelman of a three-year suspension on being involved in the audits of SEC clients. Support your position.

3. Assume that you are an audit manager in a public accounting firm. The engagement partner asks you to modify client work papers after the financial statements and opinion has been issued. Determine what you would do in this situation. Provide your rationale.

4. Evaluate the practice of materiality used by public accounting firms and how accounting firms should address it with clients.

5. North Faces management teams were criticized for strategic blunders that they made over the course of the company's history. Discuss whether auditors have a responsibility to assess the quality of the key decisions made by client executives. Defend your answer.

Assignment 3, F & C International

Read the case study titled F C International prior to doing this assignment. Write a five to six page paper in which you:

1. Over time, there has been significant legislation passed, such as Sarbanes-Oxley, yet corporate fraud is still pervasive in today's business environment. Suggest three new ways that you believe will eradicate corporate fraud.

2. In the F C case, inventory manipulation was used to enact the fraud. Discuss the proper internal controls needed over inventory and how these controls will act as a deterrent to fraudulent activities.

3. For a moment, step into the shoes of Catherine Sprauer at F C International. Indicate what you would have done following each of the confrontations she had with the two employees who insisted that F C executives were involved in a fraudulent scheme to misrepresent the company's financial statements.

4. Discuss how accounting firms should modify their audit procedures to ensure the risk of financial fraud is minimized.

5. Discuss how the Securities and Exchange Commission (SEC) continues to fail to detect fraudulent activities in publically traded companies. Suggest a recommendation for improvement.

6. Evaluate whether legislation and regulatory agency oversight will increase or decrease corporate fraud. Explain your position.

Assignment 4, Financial Analysis

Evaluate the current financial condition of Eastman Kodak based on its most recent quarterly report, which can be located at https://www.Kodak.com. Based on your evaluation, discuss the most significant red flags for its public accounting firm to consider.

Assume that you are the PricewaterhouseCoopers audit engagement partner and have assessed Kodak as a high-risk client. Explain the modification you would make to the audit engagement procedures to minimize any potential liability of the firm.

Create an argument to the Kodak shareholders that, despite the long relationship between Kodak and PricewaterhouseCoopers, the public accounting firm maintains its professional independence.

In audits of high-risk clients, determine which requirements in the AICPA Code of Professional conduct are most likely to be breached by the auditors. Provide your rationale.

Analyze the risk of financial fraud at Kodak and how it is most likely to be committed. Based on your analysis of the financial fraud risk areas, discuss the internal controls that should be implemented. Given Kodak filing for bankruptcy, discuss the fiduciary responsibility of the audit committee and board of directors.

Reference no: EM131175553

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