Review the discussion of the Parmalat fraud described in the
Review the discussion of the Parmalat fraud described in the chapter.
a. Describe the audit procedures that could have discovered the misstatements and explain why they could have been effective.
b. Why might a company set up a subsidiary to hide fraudulent transactions? Was it easier for fraud to occur and not be detected because this subsidiary was audited by a different auditor than the ones who signed the audit report? Explain your answer.

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