In March 2017, AmTrust Financial revealed that it had a variety of internal control material weaknesses, one of which led to a material misstatement in the revenue cycle.

1. Obtain the 10-k of AmTrust financial services. Describe the types of services that the company provides. You can find it using the following link:

https://www.sec.gov/Archives/edgar/data/1365555/00013655517000059/0001365555-17-000059-index.htm

1. What is the nature of the errors and why was it critical for the company to remedy those errors?
2. The subsequently restarted 2014 and 2015 financial statements were audited by BDO LLP. The company switched auditors to KPMG LLP for the FYE2016 financial statements, and KPMG's audit resulted in the detection of the internal control material weaknesses and the subsequent restatements of the financial statements. Why might a new auditor discover an internal control material weakness that the prior auditor did not discover?
3. What does the auditor switch and subsequent revelation of the internal control material weakness imply about the quality of BDO's audits of the 2014 and 2015 financial statements?
4. As it turns out, a former BDO auditor was actually the one who alerted the Federal Bureau of Investigation of the financial woes of AmTrust. S(he) became a whistleblower, carrying around a tiny recording device disguised as a Starbucks gift card. Given this information, revisit your answer to part c. of the question.
5. Search the internet to determine the decline in AmTrust's stock price on the day that the whistleblower allegations become public.

Answer rating: 100% (QA)

1 Types of Services Provided by AmTrust Financial Services Based on the 10K report AmTrust Financial Services is a multinational insurance holding com... View the full answer