USSC Case:

4. What factors in the auditor-client relationship create a power imbalance in favor of the client? Discuss measures that the profession could take to mitigate the negative consequences of this power imbalance.

5. Regarding the dispute over the alleged tooling/production costs incurred for USSC by Barden, identify (a) the evidence Hope collected that supported the USSC point of view that the costs were for tooling modifications and (b) the evidence that supported the position that the costs were generic production expenses. What do generally accepted auditing standards suggest are the key evaluative criteria that an auditor should consider when assessing audit evi- dence? Given these criteria, do you believe Hope was justified in deciding that the costs were for tooling modifications? Why or why not?

6. In your opinion, did Hope satisfactorily consider the possibility that there were additional suspicious tooling charges being paid and recorded by USSC? If not, what additional steps should he have taken to further explore this possibil- ity? If Hope believed that there was some likelihood that his client had engaged in an illegal act, what additional audit procedures, if any, would have been appropriate?