The shareholders of Escalante Company are suing the external auditors of the company. The shareholders are upset
Question:
The shareholders of Escalante Company are suing the external auditors of the company. The shareholders are upset because the management of Escalante Company produced overly positive financial statements and used these financial statements to lure new investors. Escalante Company is now bankrupt, the managers are facing prison time, and the external auditors are in monetary damages settlement talks with the shareholders of Escalante Company.
What role could the Public Company Accounting Oversight Board (PCAOB) have played in avoiding this catastrophe?
Conduct an inspection of the external audit firm
Review the tax returns of the company
Enforce compliance with the Foreign Corrupt Practices Act
Provide ethics training for the top managers of the company
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws