Discuss the red flags that existed in the zzzz best case

Assignment Help Management Theories
Reference no: EM131380072

Legal Liability Issues The ZZZZ Best fraud was one of the largest of its time. ZZZZ Best reportedly settled a shareholder class action lawsuit for $35 million. Ernst & Whinney was sued by a bank that had made a multimillion-dollar loan based on the financial statements for the three-month period ending July 31, 1986. The bank claimed that it had relied on the review report issued by Ernst & Whinney in granting the loan to ZZZZ Best. However, the firm had indicated in its review report that it was not issuing an opinion on the ZZZZ Best financial statements. The judge ruled that the bank was not justified in relying on the review report because Ernst & Whinney had expressly disclaimed issuing any opinion on the statements. Barry Minkow was charged with engaging in a $100 million fraud scheme. He was sentenced to a term of 25 years

1. Do you believe that auditors should be held liable for failing to discover fraud in situations such as ZZZZ Best, where top management goes to great lengths to fool the auditors? Answer this question with respect to the ethical and professional responsibilities of audit professionals when conducting an audit.

2. Discuss the red flags that existed in the ZZZZ Best case and evaluate Ernst & Whinney's efforts with respect to fraud risk assessment. Do you think Ernst & Whinney's relationship with ZZZZ Best influenced risk assessment and the work done on the audit?

3. These are selected numbers from the financial statements of ZZZZ Best for fiscal years 1985 and 1986.

Reference no: EM131380072

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 pract

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 con

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 financ

What steps might the auditor take at given point

If the auditor discovers that the audit committee routinely ignores such communications especially when they are critical of management's use of GAAP in the financial statem

How would you determine whether to include reference

How would you determine whether to include reference to the correction in the audit report? If reference is needed, how should it affect the type of audit opinion given.

What is the purpose of the auditors evaluation

What is the purpose of the auditor's evaluation of internal controls in these contexts with respect to conducting an audit in accordance with established auditing standards?

What stage of moral development in kohlbergs model is best

How might the employee justify her actions if questioned by the auditor with respect to no harm and no responsibility? What stage of moral development in Kohlberg's model is

What expressions enable the cpa to build a defense

What expressions enable the CPA to build a defense should the audit wind up in the courtroom? How does your analysis relate to the opening statement in the chapter by Abe Br


Write a Review

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd