A major focus of the trial in this case was BDO Seidman’s consideration of, and response to, the “red flags” apparent during the 1995 HMI audit. Define or describe the phrase “red flags.” Explain the impact of red flags identified by auditors on each major phase of an audit.
Answer to relevant QuestionsThe PSLRA requires auditors to report to the SEC illegal acts “that would have a material effect” on a client’s financial statements, assuming client management refuses to do so. Briefly describe three hypothetical ...Explain why the SEC ruled that BDO Seidman’s independence was jeopardized by the lawsuits that named the accounting firm, Leslie Fay, and top executives of Leslie Fay as codefendants.Arthur Young was criticized for not encouraging Lincoln to invoke the substance-over-form principle when accounting for its large real estate transactions. Briefly describe the substance-over-form concept and exactly what it ...What responsibility does an auditor have to uncover fraud perpetrated by client management? Discuss factors that mitigate this responsibility and factors that compound it. Relate this discussion to Arthur Young’s audits of ...In testimony before Congress, George Greenspan reported that one means he used to audit the insurance restoration contracts was to verify that his client actually received payment on those jobs. How can such apparently ...
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