BDO Seidman’s attorneys pointed out correctly that professional standards do not prohibit auditors and client personnel from being “friends.” At what point do such relationships result in violations of the auditor independence rules and guidelines? Provide hypothetical examples to strengthen your answer.
Answer to relevant QuestionsAccording to court testimony, on 20 July 1995, Drew Bergman recommended to HMI’s board of directors that Mei-ya Tsai be hired as the company’s chief accounting officer (CAO). One week later, BDO Seidman issued its audit ...The 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 ...Identify and briefly describe the specific fraud risk factors present during the 2000 Next-Card audit. How should these factors have affected the planning and execution of that engagement?Professional standards require auditors to consider a client’s “control environment.” Define control environment. What weaknesses, if any, were evident in Lincoln’s control environment?Explain what is implied by the term low-balling in an audit context. How can this practice potentially affect the quality of independent audit services?
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