Read the case study “Heartland Payment Systems” and answer the questions:

1. What type of subsequent event is the announcement of the data breach? What are management’s and the auditor’s responsibilities, respectively, for the data breach? Cite the relevant authoritative accounting and auditing literature in your response.

2. If you were the audit partner, what questions would you ask the company's management to evaluate the nature and extent of the data breach?

3. Do you believe that the shareholder lawsuit has met all of the conditions for using the company and its management and could result in a financial loss for Heartland? Why or why not?

4. Do you agree with Heartland’s decision that a loss contingency should not be accrued in the financial statements? If not, what types of costs do you believe could have been reasonably estimated and accrued or disclosed at that time? Cite the relevant accounting standards in your response.

5. What is your opinion regarding whether Heartland will exist during 2009? Cite whether you believe the arguments noted above are compelling and provide any additional information that you use outside of what has referenced above in your response.

6. Do the company and the auditor have an ethical responsibility to be conservative (i.e., pre-emptively disclose potential issues) when disclosing whether the company will exist as a going concern? Why or why not?

7. There has been a debate in recent years regarding whether the company or the auditor is in the best position to evaluate the company's going concern status. Which party do you believe will provide the best viewpoint for investors?

Answer rating: 100% (QA)

1 The type of the data is type II subsequent event Data security controls effectiveness is measured The responsibility of the auditor is to evaluate some organizations accounting for the losses relate... View the full answer