The FDIC asserted gross negligence by Crowe. Allegedly, there was concealment and collusion to pep petrate a fraud within the bank and from outside sources. Crowe was held to the AICPA's standards for consulting work which, while stringent as the AICPA Code of Professional Conduct standards, do not carry the force of law that the Sarbanes-Oxley Act and the PCAOB auditing standards do. The FDIC also maintained that Crowe should have followed the professional standards promulgated by the Institute of Internal Auditors. Would an internal audit function staffed by Colonial employees instead of an outside consultant have been sued under the same circumstances? The Colonial ruling marks the first time an auditor has been held liable for fraud in many years. Lawyers who defended auditors were outraged by the ruling, calling it "an aggressive interpretation," "extremely disturbing." and a "one-off decision that will be reversed upon appeal." They are particularly upset that the case ever went to trial. In most auditing failure cases, companies are barred from suing their auditors for failing to detect fraud if-as happened at Colonial-their employees actively participated in the mal feasance. But in this case, the bank went bankrupt, and the FDIC sued to recover money for taxpayers. Courts around the country are split on whether the government can do that, and Judge Rothstein opted to let the FDIC sue. Attorney Michael Dell argued that the Colonial decision would fundamentally change the nature of auditing: "Audit firms would effectively be insurers for the wrongdoing of their clients." If the ruling stands, some lawyers believe investors will find it easier to hold auditors accountable in future corporate fraud cases." Questions 1. Update the facts of this case for any relevant events that have taken place since the January 2018 ruling. 2. Which rules of conduct in the AICPA Code of Professional Conduct were violated by PWC? Explain. 3. Which PCAOB auditing standards were violated by PWC? Explain why those violations occurred and whether PWC should be held responsible. 4. Attorney Michael Dell argued that the Colonial Bank ruling would effectively hold audit firms liable for the wrongdoing of their clients. Is that the way you read the facts of the case and Judge Rothstein's ruling? Is there anything wrong with holding auditors responsible for the wrongdoing of their clients when client employees actively participate in the malfeasance? Explain. 5. Is it in the public interest to allow auditors to escape legal liability under the in pari delicto doctrine? 6. When should auditors disclose critical audit matters (CAMs)? Assume the Colonial Bank case occurred subsequent to the effective dates of the new auditing standard on disclosing CAMs. Which disclosures should PWC have included in the audit report of Colonial Bank? Major Case 2)no Logitech International Logitech International S.A. (LOGI) is incorporated in Switzerland and has substantial operations In the United States. LOGI is primarily involved in manufacturing and selling peripherals for computers and electronic devices. Its shares are listed on both the Nasdaq Global Select Market, under the trading symbol LOGI, and the SIX Swiss Exchange, under the trading symbol LOGN. The company maintains an executive office and its Americas region headquarters in Newark, California. LOGI's common stock registered with the Securities Exchange Commission (SEC) pursuant to the Exchange Act of 1933. "Brooke Masters, PWC's Failure to Spot Colonial Fraud Spells Trouble for Auditors, January 5, 2018, https//www.it.co content/c2ce45d6-f116-11e7-b220-857e26d laca4