Reference no: EM13507448
Question 1
In 2002, the audit firm Arthur Andersen (AA) collapsed following charges brought against it in the United States relating to the failure of its client, Enron Corporation, a United States energy company. Enron was one of the biggest clients of AA. The relationship between Enron and AA was said to be 'cosy', facilitating both improper accounting and auditing practices. These practices led to extensive legal proceedings and the eventual collapse of AA. Some of AA's other audit clients announced that they would be dismissing AA as their auditor even before it was clear that AA would not survive.
Required:
Use the three (3) theories outlined in Chapter 1 of Moroney on the demand for audits to illustrate why these clients dismissed Arthur
Andersen as their auditor.
Use the following for background to this case:
abcnews.go.com/Business/story
news.bbc.co.uk/2/hi/business/2047122.stm
Adapted from Moroney, Campbell & Hamilton (2014)
Question 2
Understanding the structure and composition of the board of directors and its sub-committees assists the auditor in documenting and evaluating the governance structure and in identifying potential risks within that structure.
Required:
1. Explain why an understanding of the governance of an audit client is important in assessing the client's business risk.
2. Explain why an understanding of business risk is relevant to the final audit judgment and to public expectations of the audit process.
3. Access copies of the the 2014 annual reports for Namoi Cotton Co-operative Ltd
4. Examine both sets of annual reports for information about the governance structure of these companies.
5. Identify whether these companies have an audit committee and/or a risk committee.
6. Evaluate the impact that the existence or non existence of these committees may have on the external audit function.
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What would you recommend for amazon shares
: Describe the general procedure of forecasting pro-forma income statement and balance sheet as we discussed in class and what would you recommend for Amazon Shares?
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Compute cost of goods manufactured
: Work-in-process inventory was $14,000 at January 1 and $17,500 at December 31. Finished goods inventory was $69,000 at January 1 and $56,800 at December 31.
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Calculate the total amount of time that the ball is in air
: A golf ball is dropped from rest from a height of 8.10 m. It hits the pavement, then bounces back up, rising just 5.60 m before falling back down again. calculate the total amount of time that the ball is in the air
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Find the acceleration of the toboggan
: A toboggan approaches a snowy hill moving at 10.9 m/s. The coefficients of static and kinetic friction between the snow and the toboggan are 0.470 and 0.320, Find the acceleration of the toboggan as it is going up the hill
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Governance of an audit client
: Examine both sets of annual reports for information about the governance structure of these companies and identify whether these companies have an audit committee and/or a risk committee
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Find the magnitude of the charge on the balls
: Two small plastic balls hang from threads of negligible mass. Each ball has a mass of 0.170 g and a charge of magnitude q. Find the magnitude of the charge on the balls
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What is sam gross profit for march
: In the market for foreign-currency exchange in the open economy macroeconomic model, the amount of net capital outflow represents the quantity of dollars.
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What would be the total on the credit side of a post
: Based on the following information, what would be the total on the Credit side of a post- closing trial balance, assuming all accounts have a normal balance?
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Calculate each of the following for each alternative
: Income before interest and taxes is expected to be $3,500,000. The company has a 30% tax rate and has 600,000 shares of common stock outstanding prior to the new financing.
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