Review the discussion of the Parmalat fraud in the chapter.
a. Why was the SEC upset about the missing debt on Parmalat’s financial statements?
b. If you had owned stock in Parmalat, would you have been happy with the Tanzi family’s expenditures? Explain your answer.
c. What fraud risk factor is present in a family-run business? How do the auditors gather evidence to determine whether the financial statements are misstated in this situation?
d. Parmalat was the largest audit client for Deloitte & Touche in Italy. What role could this have played in its audit of Parmalat?
e. Should Deloitte & Touche in the United States or Deloitte & Touche in Hong Kong be financially responsible for the failed audit at Deloitte & Touche in
Italy? Explain your answer.
f. Consider the reputation of Deloitte & Touche. Did the actions of Deloitte & Touche in Italy hurt the company’s reputation in the United States and Hong Kong? Explain your views and why they seem reasonable to you.