Question

In August 2011, the PCAOB barred two former Ernst & Young LLP (E&Y) employees from auditing public companies, alleging they provided misleading documents to PCAOB inspectors who were evaluating the audit firm's work. One partner was barred for three years, and a senior manager was barred for two years.
The PCAOB said that shortly before its inspectors were to inspect an E&Y audit of an unidentified company, the two auditors created, backdated, and placed in the audit files a document concerning the valuation of one of the audit client's investments. One of the auditors allegedly authorized other members of the audit team to alter other working papers in advance of the inspection. The changes were not disclosed to the PCAOB.
E&Y indicated that the conduct of the two auditors had no impact on the client's financial statements or on E&Y's audit conclusions.
a. What is audit documentation, and why is it important to a quality audit?
b. Given that the conduct of the two auditors had no impact on the client's financial statements or on E&Y's conclusions, why was this situation over audit documentation of concern to the PCAOB?
c. Suppose that you are asked by a superior to add or alter an audit workpaper after completing an audit engagement. Use the framework for ethical decision making presented in Chapter to consider your actions in this situation.



$1.99
Sales5
Views95
Comments0
  • CreatedSeptember 22, 2014
  • Files Included
Post your question
5000