Professional skepticism and josephsons six pillars

Assignment Help Management Theories

Reference no: EM131380065

"Accounting firms and their personnel must continually evaluate their clients' accounting and related disclosures, putting themselves in investors' shoes." This statement was made on February 8, 2012, by Claudius B. Modesti, director of the PCAOB Division of Enforcement and Investigations, in reporting on PCAOB's audits of Medicis Pharmaceutical Corporation's fiscal 2005 through 2007 financial statements. Medicis was a client of Ernst & Young that was undergoing an inspection in accordance with PCAOB's enforcement program.

The board found that EY and its partners failed to audit key assumptions sufficiently and placed undue reliance on management's representation that those assumptions were reasonable. Further, the firm failed to evaluate properly a material departure from GAAP in the company's financial statements-its sales returns reserve. 75 PCAOB chairman James R. Doty was quoted as saying: "The auditor's job is to exercise professional skepticism in evaluating a public company's accounting and in conducting its audit to ensure that investors receive reliable information, which did not happen in this case."

Following the audits and PCAOB inspection of EY's audit of Medicis, the company corrected its accounting for its sales returns reserve and filed restated financial statements with the SEC.

What is the link between professional skepticism and Josephson's Six Pillars of Character that were discussed? Given the limited information, which rules of professional conduct in the AICPA Code were violated by EY? Explain why.

Reference no: EM131380065

Questions Cloud

Provide specifics about data integrity problem you encounter : If you ran into trouble with your implementation, provide specifics about the data integrity problems you encountered and explain the modifications that will be necessary to correct the data integrity and concurrency issues.

What is strategy implementation : You may use the same company you have previously used, or select a different company for your analysis on how a company has implemented a corporate strategy or a future policy rollout. Consider a company that has done a strategy development, and i..

Write a few sentences describing driver reaction times : That time, measured from the moment the driver first sees the danger until he or she steps on the brake pedal, is thought to follow a Normal model with a mean of 1.5 seconds and a standard deviation of 0.18 second.

How audit morality plays key role in determining best audit : Audit morality includes moral sensitivity, moral judgment, moral motivation, and moral character. Explain how audit morality plays a key role in determining best audit practice that influences audit performance.

Professional skepticism and josephsons six pillars : What is the link between professional skepticism and Josephson's Six Pillars of Character that were discussed? Given the limited information, which rules of professional conduct in the AICPA Code were violated by EY? Explain why.

Describe the w''s for these data : Create parallel boxplots as best you can from these summary statistics to display these results.

Discuss about the case-charleston manufacturing company : Charleston Manufacturing Company is a South Carolina producer of four sizes of high-quality, solid oak picture frames; the Small, the Medium, the Large and the Extra Large. The flow of work-in-process (dashed arrow lines) through the six producti..

Describe the importance of organizational climate : Describe the importance of organizational climate and motivation and describe Kelley's model of effective followership (moving between roles).

Difference between language and present fairly statement : As a user of the financial statements in each instance, does one expression more than the other give you a greater comfort level with respect to the conformity of the financial statements with GAAP? Why or why not?

User Account

All Pages