b$.$ Given that non$-$CPAs who consult are not subject to formal professional standards, describe the advantages and disadvantages that result from CPAs being subject to such standards.Part I: Merry$-$Go$-$Round $($MGR$),$ a clothing retailer located primarily in shopping malls, was founded in $1968.$ By the early $1990$s$,$ the company had gone public and had expanded to approximately $1,500$ stores, $15\mathrm{.}000$ employees, and $$1$ billion in annual sales. The company's locations in malls targeted the youth and teen market. The company was listed by Forbes magazine as one of the top $25$ companies in the late $1980$s$.$ However, in the early $1990$s$,$ the company faced many challenges. One of its cofounders died, and the other left to pursue unrelated business interests. The company faced stiff competition from other retailers $($e$.$g$.,$ The Gap and Banana Republic$),$ fashion trends changed, and mall traffic declined. Sales fell, and experts speculated that MGR failed to anticipate key industry trends and lost sight of its customer market. To try to regain its strong position, the company acquired Chess King, Inc., a struggling chain of men's clothing stores located in malls, in $1993.$

The company's sales continued to fall, and later in $1993$ the company brought back one of its cofounders to manage the company and wrote down a significant amount of inventory. However, this inventory write$-$down caused the company to violate loan covenants. Facing bankruptcy, the company, based on the advice of its newly hired law firm Swidler and Berlin, hired turnaround specialists from EY to help overcome the financial crisis and develop a long$-$term business plan. However, the company's decline continued, and it filed for Chapter $11$ reorganization in $1994.$ In $1996,$ the remaining assets were sold for pennies on the dollar.

Subsequently, a group of $9\mathrm{.}000$ creditors $($including former employees and stockholders$)$ began litigation against parties it deemed responsible for their losses. These parties included EY$,$ which the creditors sued for $$4$ billion in punitive and compensatory damages $($EY$\text{'}$s fees from MGR totaled $$4\mathrm{.}5$ million$).$

The lawsuit alleged that EY's incompetence was the main cause of MGR$\text{'}$s decline and demise. It also alleged the following:

$-$ The turnaround team did not act quickly enough.

$-$ The leader of the team took an eight$-$day vacation at a critical point during the engagement.

$-$ The cost$-$cutting strategy called for only $$11$ million in annual savings, despite the fact that the company was projected to lose up to $$200$ million in $1994.$

$-$ While closing unprofitable stores was key to MGR$\text{'}$s survival, by $1995$ only $230$ of $1,434$ stores had been closed and MGR still operated two stores in some malls.

$-$ The turnaround team included inexperienced personnel$-$a retired consultant, a partner with little experience in the United States or with retail firms in general, and two recent college graduates.

EY denied any wrongdoing but in April $1999$ agreed to pay $$185$ million to settle with the injured parties.