How should handle the situation for kpmg standards committee

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Question 1: You are the lead auditor at KPMG. You are undertaking an audit at Smithfield Inc and you think this company may be understating their liabilities on the balance sheet. The Smithfield Inc. transactions are very complex and any outsiders may never figure this out. You ask your firm KPMG's Standards Committee how you should handle the situation? Their reply is 'Require Smithfield Inc. to report all its liabilities'. Smithfield is your most important client and they are pressuring you to certify their liabilities. You can rationalise that Smithfield's reported amounts are okay. What should you do? If you decide that you will certify the liabilities as they are, what might be the consequences of this action?

Reference no: EM132601182

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