Reference no: EM13867182

1.What is meant by ,earnings management, and how does it relate to the accounting techniques followed by Autonomy?
2. In an analysis by the Association of Certified Financial Crime Specialists (ACFCS) about the Autonomy merger with HP, the following statement is made The scandal is prompting questions about who is to blame for the soured merger. As details emerge, the case is spot lighting the difficulties that accountants and lawyers face in complex mergers and acquisitions and business deals. The case also raises the issue of what responsibility these professionals have for detecting potentially fraudulent business records where the line between accounting discrepancies and financial crime is blurred., Given the facts of the case, evaluate the ethical and professional responsibilities of the external auditors with respect to the AICPA Code of Professional Conduct.
3. Meg Whitman is quoted in the case as saying that the board, which approved the Autonomy transaction, relied on audited information from Deloitte & Touche and additional auditing from KPMG. Given that auditing standards and legal requirements dictate that auditors are responsible for detecting material fraud in the financial statements of audit clients, would you blame the auditors for failing to uncover the improper accounting for revenue at Autonomy? Which audit standards are critical in making that determination?
4. Revenue recognition transactions such as those described in question 2 are referred to as ,linked transactions, under IFRS. Research the revenue recognition rules for linked transactions and compare them to what Autonomy did. Does it seem that Lynch position is valid as stated in the case that the accusations against him and Autonomy for improper revenue recognition practices was not fair because Autonomy was following IFRS and they are different than the GAAP standard used by HP, which means it recognizes revenue differently in certain situations from U.S. practices?