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978-0077862213 Case Solution Busyboto Scooter
Busyboto Scooter Sales, Inc. Busyboto Scooter Sales, Inc. is the largest manufacturer of scooter bikes in the world. In 2003, the company announced a revolutionary scooter, a 250cc bike with sporty styling and advanced electronic features, including the Busyboto B-Matic […]
978-0077862213 Case Solution Foreign Corrupt Practices Act
Foreign Corrupt Practices Act Allison Yancy and Ginger Boggs just finished playing four hours of board games following a contentious meeting with top management over the responsibility of Monosystems International, a company each had worked for from 1999-2009, for instituting […]
978-0077862213 Case Solution Geltand Moola
Gelt and Moola Gelt Systems is a publicly-owned corporation based in Portland, Oregon. Gelt designs and develops networks communication hardware and software products and provides related support services. Gelt is audited by Ducks and Beavers LLP, a regional firm located […]
978-0077862213 Case Solution Hot and Cold Inc
Hot & Cold Inc. Hot & Cold Inc., is a publicly-owned company headquartered in the Los Angeles area. It is a global company with thousands of employees around the world. The company manufactures an extensive variety of temperature measuring equipment […]
978-0077862213 Case Solution Lupeville Senior Center
Lupeville Senior Center Lupeville Senior Center serves adults over sixty years of age by providing in home nursing care and residential facilities. The center in Lupeville, Indiana can accommodate up to one hundred residents. The facility was recently investigated for […]
978-0077862213 Case Solution Peachtree Enviro Mgt Systems
Peachtree Enviro-Management Systems Peachtree Enviro-Management Systems is a large provider of trash hauling services primarily in the Atlanta area. The company grew in its early years from $1 million in assets, $700,000 in revenue, and $100,000 in net income in […]
978-0077862213 Case Solution Second v. First Natl
Second National Bank v. First National Bank1 This case involves three parties: 1. A customer, Paul Gerry, who went to a bank and established a relationship after which (about one year later), the customer was allowed to open a revolving […]
978-0077862213 Case Solution The City of West Buckle
The City of West Buckle Kile Jalop is the chief of police of the city of West Buckle. Jalop was the chief of a smaller town and decided to move up after three years. He accepted the offer from the […]
978-0077862213 Case Solution The Ethics of iPoding
The Ethics of iPod-ing Your accounting professor just finished a lecture on why it is unethical to download music to an iPod. According to Professor Goody, it is wrong to download music from iTunes Music Store because the artists that […]
978-0077862213 Case Solution The Lecturer
The Lecturer It was reported in the Los Angeles Times on March 25, 2006 (Page B7) that a business school lecturer at USC was arrested by FBI agents for allegedly bilking students out of more than $1.5 million and spending […]
978-0077862213 Case Solution The New Staff Member
The New Staff Member Pavzi Razzouk is working on his first audit after graduation. He came across an unusual transaction. The client had recorded $1million in operating revenue that represented a payment from a customer who had backed out of […]
978-0077862213 Case Solution The State of Nirvana
The State of Nirvana The state of Nirvana was formed as the 51st state of the United States of America in 2010 after California decided to split in two. The northern part of the state became the State of Nirvana […]
978-0077862213 Case Solution TheCPA Review Course
The CPA Review Course The CPA review course, “Results and Performance,” or RAP is coming to the campus of State University to talk to accounting and other interested students about their review program. Daniel Justin is the campus representative for […]
978-0077862213 Case Solution Whistleblowing under Sarbanes
Whistleblowing under Sarbanes-Oxley The case of George Hernondez is a unique one under the whistleblower protection provision of the Sarbanes-Oxley Act because it is the first documented case where someone who sued under Section 806 of the Act was given […]
978-0077862213 Case Solution Who is Responsible
Who is Responsible? On August 21, 2007, Comfi Beds and Furniture, Inc. planned to purchase Sleep Ezy Corporation, and hired the accounting firm of Loosy and Goosy LLP, to review the audit that had been prepared by Billy Bob and […]
978-0077862213 Case Solution WiFi Security
Wi-Fi Security: “We Spy for U” In 2006 the start-up company, “We Spy for U,” located in the Research Triangle Park in North Carolina, developed a Wi-Fi security system that prevents unauthorized users from hacking into a computer laptop as […]
978-0077862213 Chapter 1 Case Solution Part 1
Case 1-1 Harvard Cheating Scandal Yes. Cheating occurs at the prestigious Harvard University. In 2012, Harvard forced dozens of students to leave in its largest cheating scandal in memory but the institution would not address assertions that the blame rested […]
978-0077862213 Chapter 1 Case Solution Part 10
Case 1-10 Telecommunications, Inc. Telecommunications, Inc., is a U.S. company, a global leader in information technology, and it specializes in building data network systems. The company is a major player in the industry, although it is no match for companies […]
978-0077862213 Chapter 1 Case Solution Part 2
Case 1-2 Giles and Regas Ed Giles and Susan Regas have never been happier than during the past four months since they have been seeing each other. Giles is a 35-year-old CPA and a partner in the medium-sized accounting firm […]
978-0077862213 Chapter 1 Case Solution Part 3
Case 1-3 NYC Subway Death: Bystander Effect or Moral Blindness On December 3, 2012, a terrible incident occurred in the New York City subway when Ki-Suck Han was pushed off a subway platform by Naeem Davis. Han was hit and […]
978-0077862213 Chapter 1 Case Solution Part 4
Case 1-4 Lone Star School District Jose and Emily work as auditors for the state of Texas. They have been assigned to the audit of the Lone Star School District. There have been some problems with audit documentation for the […]
978-0077862213 Chapter 1 Case Solution Part 5
Case 1-5 Reneging on a Promise Part A Billy Tushoes recently received an offer to join the accounting firm of Tick and Check LLP. Billy would prefer to work for Foot and Balance LLP but has not received an offer […]
978-0077862213 Chapter 1 Case Solution Part 6
Case 1-6 Capitalization versus Expensing Gloria Hernandez is the controller of a public company. She just completed a meeting with her superior, John Harrison, who is the chief financial officer of the company. Harrison tried to convince Hernandez to go […]
978-0077862213 Chapter 1 Case Solution Part 7
Case 1-7 Eating Time Kevin Lowe is depressed. He has been with the CPA firm Stooges LLP for only three months. Yet the partners in charge of the firm—Bo Chambers and his brother Moe Chambers—have asked for a “sit-down.” Here’s […]
978-0077862213 Chapter 1 Case Solution Part 8
Case 1-8 A Faulty Budget Jackson Daniels graduated from Lynchberg State College two years ago. Since graduating from the college, he has worked in the accounting department of Lynchberg Manufacturing. Daniels was recently asked to prepare a sales budget for […]
978-0077862213 Chapter 1 Case Solution Part 9
Case 1-9 Cleveland Custom Cabinets Note: A correction was made to the case in the text. The cost of direct materials used should be $2,000,000. The cost of goods sold is both cost of goods manufactured and sold. Cleveland Custom […]
978-0077862213 Chapter 1 Solution Manual Part 1
Chapter 1 Discussion Questions 1. A common ethical dilemma used to distinguish between philosophical reasoning methods is the following. Imagine that you are standing on a footbridge spanning some trolley tracks. You see that a runaway trolley is threatening to […]
978-0077862213 Chapter 1 Solution Manual Part 2
11. Is there a difference between cheating on a math test, lying about your age to purchase a cheaper ticket at a movie theatre, and using someone else’s ID to get a drink at a bar? All are examples of […]
978-0077862213 Chapter 2 Case Solution Part 1
Case 2-1 WorldCom The WorldCom fraud was the largest in U.S. history, surpassing even that of Enron. Beginning modestly during mid-year1999 and continuing at an accelerated pace through May 2002, the company, under the direction of Bernie Ebbers, the CEO, […]
978-0077862213 Chapter 2 Case Solution Part 10
Case 2-10 Gateway Hospital Troy just returned from a business trip for health care administrators in Orlando. Kristen, a relatively new employee who reports to him, also attended the conference. Troy works for Gateway Hospital, a for-profit hospital in the […]
978-0077862213 Chapter 2 Case Solution Part 2
Case 2-2 Better Boston Beans Better Boston Beans is a coffee shop located in the Faneuil Hall Marketplace near the waterfront and Government Center in Boston. It specializes in exotic blends of coffee, including Sumatra Dark Roast Black, India Mysore […]
978-0077862213 Chapter 2 Case Solution Part 3
Case 2-3 The Tax Return Brenda Sells sent the tax return she prepared for the president of Purple Industries, Inc., Harry Kohn, to Vincent Dim, the manager of the tax department at her accounting firm. Dim asked Sells to come […]
978-0077862213 Chapter 2 Case Solution Part 4
Case 2-4 Shifty Industries Shifty Industries is a small business that sells home beauty products in the San Luis Obispo, California area. The company has experienced a cash crunch and is unable to pay its bills on a timely basis. […]
978-0077862213 Chapter 2 Case Solution Part 5
Case 2-5 Blues Brothers Assume it is December 31, the last day of the fiscal year, and you are an internal accountant for Saturday Night Accessories, a privately-owned company run by the Blues Brothers, that provides personal services to consumers. […]
978-0077862213 Chapter 2 Case Solution Part 6
Case 2-6 Supreme Designs, Inc. Supreme Designs, Inc., is a small manufacturing company located in Detroit, Michigan. There are three stockholders of the company—Gary Hoffman, Ed Webber, and John Sullivan. Hoffman manages the business including the responsibility for the financial […]
978-0077862213 Chapter 2 Case Solution Part 7
Case 2-7 Milton Manufacturing Company Milton Manufacturing Company produces a variety of textiles for distribution to wholesale manufacturers of clothing products. The company’s primary operations are located in Long Island City, New York, with branch factories and warehouses in several […]
978-0077862213 Chapter 2 Case Solution Part 8
Case 2-8 Juggyfroot “I’m sorry, Lucy. That’s the way it is,” Ricardo Rikey said. “I just don’t know if I can go along with it, Rikey,” Lucy replied. “We have no choice. Juggyfroot is our biggest client, Lucy. They’ve warned […]
978-0077862213 Chapter 2 Case Solution Part 9
Case 2-9 Phar-Mor The Dilemma The story of Phar-Mor shows how quickly a company that built its earnings on fraudulent transactions can dissolve like an Alka-Seltzer. One day Stan Cherelstein, the controller of Phar-Mor, discovered cabinets stuffed with held checks […]
978-0077862213 Chapter 2 Solution Manual Part 1
Chapter 2 Discussion Questions 1. Identify the stakeholders and how they were affected by Heene’s actions? The stakeholders in the “Balloon Ball Hoax” are the boy, Falcon Heene; the parents, Richard and Mayumi Heene; brothers, Bradford and Ryo Heene; Larimer […]
978-0077862213 Chapter 2 Solution Manual Part 2
10. Arthur Andersen LLP was the auditor for Enron, WorldCom, Waste Management and other companies that committed fraud. Andersen was forced to shut its doors forever after a U.S. Department of Justice lawsuit against the firm that it had obstructed […]
978-0077862213 Chapter 3 Case Amgen Whistleblowing
Case 3-2 Amgen Whistleblowing Case Amgen, a Thousand Oaks, California–based company, has been dealing with lawsuits and whistle-blower claims for years over its marketing tactics. The following describes the lawsuits, language from the legal filings against Amgen, and a statement […]
978-0077862213 Chapter 3 Case Bennie and the Jets
Case 3-6 Bennie and the Jets Bennie Gordon is a CPA and a member of the AICPA. Gordon works as an accounting manager at the division level at Jet Energy Company, a publicly-owned company headquartered in South Carolina. Jet Energy […]
978-0077862213 Chapter 3 Case Bhopal Part 1
Case 3-9 Bhopal, India: A Tragedy of Massive Proportions We are citizens of the world. The tragedy of our times is that we do not know this. Woodrow T. Wilson (1856–1924), 28th president of the United States At five past […]
978-0077862213 Chapter 3 Case Bhopal Part 2
India’s Position The Indian government has itself acknowledged that 521,262 persons, well over half the population of Bhopal at the time of the toxic leak, were “exposed” to the lethal gas. 1 In the immediate aftermath of the accident, most […]
978-0077862213 Chapter 3 Case Exxon XTO Merger
Case 3-7 Exxon – XTO Merger ExxonMobil Corporation (Exxon) is the world’s largest corporation in terms of revenue and one of the largest in market capitalization. It had sales of $486 billion in 2011giving it the #1 position on Fortune […]
978-0077862213 Chapter 3 Case Hewlett Packard
Case 3-4 Hewlett-Packard1 Legal Settlement On December 8, 2006, California’s attorney general announced a settlement with Hewlett-Packard (HP) over its corporate spying scandal. The civil settlement involved a lawsuit the state filed against the computer giant in Santa Clara County […]
978-0077862213 Chapter 3 Case HP
Case 3-10 Accountability of Ex-HP CEO in Conflict of Interest Charges How could a CEO and chairperson of the board of directors of a major company resign in disgrace over a personal relationship with a contractor that led to a […]
978-0077862213 Chapter 3 Case IRS Whistleblower
Case 3-5 IRS Whistleblower and Informing on Tax Cheats On October 4, 2012, the Internal Revenue Service paid a $2 million reward to a whistleblower that exposed an alleged tax avoidance scheme by Illinois Tool Works Inc. (ITW) that cost […]
978-0077862213 Chapter 3 Case parable of Sadhu Part 1
Case 3-1 The Parable of the Sadhu Bowen H. McCoy (Reproduced with the permission of the Harvard Business Review) Last year, as the first participant in the new six-month sabbatical program that Morgan Stanley has adopted, I enjoyed a rare […]
978-0077862213 Chapter 3 Case parable of Sadhu Part 2
Questions 1. According to the Ethical Dissonance Model, the ethical person-organization fit helps to define the ethical culture of an organization and one’s role in it. The ethics of an individual influences the values one brings to the workplace and […]
978-0077862213 Chapter 3 Case Steve Jobs Health
Case 3-8 Disclosure of Steve Jobs’ Health as Apple CEO: A Public or Private Matter? An important issue within the scope of corporate governance is whether a company should disclose the health problems of its CEO and how much information […]
978-0077862213 Chapter 3 Case United Thermostatic Controls
Case 3-3 United Thermostatic Controls United Thermostatic Controls is a publicly owned company that engages in the manufacturing and marketing of residential and commercial thermostats. The thermostats are used to regulate temperature in furnaces and refrigerators. United sells its product […]
978-0077862213 Chapter 3 Solution Manual Part 1
Chapter 3 Discussion Questions 1. In her book ‘Seven Signs of Ethical Collapse,’ Jennings explains: “When an organization collapses ethically, it means that those in the organization have drifted into rationalizations and legalisms, and all for the purpose of getting […]
978-0077862213 Chapter 3 Solution Manual Part 2
8. According to the IIA Code of Ethics, internal auditors should make a balanced assessment of all the relevant circumstances and should not be unduly influenced by their own interests or by others in forming judgments. Which interests are being […]
978-0077862213 Chapter 3 Solution Manual Part 3
16. In October 2010 it was reported that Cheryl Eckard, a quality-assurance manager at the pharmaceutical company Glaxo-SmithKline who had blown the whistle on the safety of products made in its Puerto Rico plant, had been fired as a result […]
978-0077862213 Chapter 4 Case America Online
Case 4-1 America Online (AOL) Background In May 2000, America Online Inc. (AOL), the world’s biggest Internet services provider at the time, settled charges that it improperly accounted for certain advertising costs. This was the first time the SEC had […]
978-0077862213 Chapter 4 Case Beauda Medical Center
Case 4-2 Beauda Medical Center Lance Popperson woke up in a sweat, with an anxiety attack coming on. Popperson popped two anti- anxiety pills, laid down to try and sleep for the third time that night, and thought once again […]
978-0077862213 Chapter 4 Case Family Games
Case 4-3 Family Games, Inc. “Yeah, I know all of the details weren’t completed until January 2, 2014, but we agreed on the transaction on December 30, 2013. By my way of reasoning it’s a continuation transaction and the $12 […]
978-0077862213 Chapter 4 Case Family Outreach
Case 4-7 Family Outreach Yimei was a senior state auditor in Michigan and licensed CPA. She has been assigned the audit of Family Outreach (FO), a non-profit social services organization that helps about 32,000 families a year with child- raising […]
978-0077862213 Chapter 4 Case First Community Church
Case 4-4 First Community Church First Community Church is the largest church in the city of Perpetual Happiness. Yes, it’s in California! A meeting was held on Friday, November 16, to address the fact that money had been stolen from […]
978-0077862213 Chapter 4 Case Gee Wiz
Case 4-6 Gee Wiz Wanda David, a licensed CPA, works for Gee LLC, a professional accountancy corporation with offices in Wisconsin and Illinois, in the audit department and she also has some small business clients she services in her spare […]
978-0077862213 Chapter 4 Case HealthSouth
Case 4-8 HealthSouth Corporation The HealthSouth case is unique because the CEO, Richard Scrushy, was initially acquitted on all accounts while five former HealthSouth employees were sentenced by a federal judge for their admitted roles in a scheme to inflate […]
978-0077862213 Chapter 4 Case Independence Violations at PwC
Case 4-10 Independence Violations at PricewaterhouseCoopers PricewaterhouseCoopers (PwC) was involved in a series of independence violations in the late 1990s and early 2000s that resulted in strengthening the independence rules for auditors We discuss these situations in two parts. Part […]
978-0077862213 Chapter 4 Case Lee Han
Case 4-5 Lee & Han, LLC Joe Kang is an audit partner for Lee & Han, LLC. Joe is a CPA in the state of Florida and a member of the AICPA. He recently met with Kate Boller, the CFO […]
978-0077862213 Chapter 4 Solution Manual Part 1
Chapter 4 Discussion Questions 1. It has been said that independence is the cornerstone of the accounting profession. Explain what this means. How do auditors protect against impairments of independence? Independence is considered the cornerstone of the accounting profession as […]
978-0077862213 Chapter 4 Solution Manual Part 2
14. What is the danger from an ethical perspective of having a CPA firm that conducts the audit of a public company also engaged in consulting with the company on the installation of a new financial information system? What about […]
978-0077862213 Chapter 4 Test Bank Part 1
Test Bank Chapter 4 Multiple Choice Questions 1. The International Federation of Accountants (IFAC) research report, Rebuilding Public Confidence in Financial Reporting: An International Perspective, has as its goal which of the following: A. Creating an international CPA certificate B. […]
978-0077862213 Chapter 4 Test Bank Part 2
44. To whom do the accounting codes of professional conduct (either the state board of public accountancy or AICPA) apply? A. Those CPAs in public accounting only. B. Those CPAs in industry, government, and education. 45. Integrity is measured in […]
978-0077862213 Chapter 5 Case Audit Client Considerations
Case 5-4 Audit Client Considerations and Risk Assessment Lanny Beaudean joined the CPA firm of Cardinal & Coyote LLP in 200 11after working for two years for the IRS in Phoenix, Arizona. Cardinal & Coyote is a second-tier CPA firm […]
978-0077862213 Chapter 5 Case Computer Associates
Case 5-1 Computer Associates Computer Associates (CA) is a business consulting and software development company that designs, markets, and licenses computer software products that allow businesses to efficiently run and manage critical aspects of their information technology. CA’s stock trades […]
978-0077862213 Chapter 5 Case Dunco Industries
Case 5-6 Dunco Industries The following two cases deal with accounting issues at Dunco Industries. Part 1 – Marcus Yamabuto Marcus Yamabuto graduated from Washington State University in June 2013. He began his career working for Dunco Industries, a public […]
978-0077862213 Chapter 5 Case Fannie Mae
Case 5- 8 Fannie Mae: The Government’s Enron Background The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are government-sponsored entities (GSEs) that operate under congressional charters to “help lower- and middle-income Americans […]
978-0077862213 Chapter 5 Case First Community Bank
Case 5-7 First Community Bank This case involves the valuation of loan loss estimates of First Community Bank (FCB) and the examination of relevant accounts by the CPA firm of Howard & Stacey LLP. FCB provided mostly residential loans to […]
978-0077862213 Chapter 5 Case Groupon
Case 5-10 Groupon Introduction The Groupon case was first discussed in Chapter 3. Here, we expand on the discussion of internal controls and the risk of material misstatement in the financial statements. Groupon is a deal-of-the-day recommendation service for consumers. […]
978-0077862213 Chapter 5 Case Krispy Kreme Doughnuts
Case 5-5 Krispy Kreme Doughnuts, Inc. On March 4, 2009, the SEC reached an agreement with Krispy Kreme Doughnuts, Inc., and issued a cease- and-desist order to settle charges that the company fraudulently inflated or otherwise misrepresented its earnings for […]
978-0077862213 Chapter 5 Case Royal Ahold NV
Case 5- 9 Royal Ahold N.V. (Ahold) Summary of the Charges against Ahold On October 13, 2004, the SEC charged Royal Ahold N.V. (Ahold) with multiple violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act, […]
978-0077862213 Chapter 5 Case ZZZZ Best
Case 5-2 ZZZZ Best The story of ZZZZ Best is one of greed and audaciousness. It is the story of a 15-year-old boy from Reseda, California, who was driven to be successful regardless of the costs. His name is Barry […]
978-0077862213 Chapter 5 Solution Manual Part 1
Chapter 5 Discussion Questions 1. What is the purpose of audit “risk assessment”? What are its objectives, and why is it important in assessing the likelihood that fraud may occur? Risk assessment is the process of estimating the likelihood of […]
978-0077862213 Chapter 5 Solution Manual Part 2
13. In 2005, the IMA reported the results of a survey of business, academic, and regulatory leaders conducted by the Center for Corporate Change that found the corporation’s culture to be the most important factor influencing the attitudes and behavior […]
978-0077862213 Chapter 6 Case Con-Way Inc
Case 6-2 Con-way Inc. Summary of Findings Con-way is a Delaware corporation headquartered in San Mateo, California. It is an international freight transportation and logistics services company that conducts operations in a number of foreign jurisdictions. During the relevant period, […]
978-0077862213 Chapter 6 Case Halliburton and KBR
Case 6-1 SEC v. Halliburton Company and KBR, Inc. On February 11, 2009, the SEC announced settlements with KBR, Inc., and Halliburton Company to resolve SEC charges that KBR subsidiary Kellogg Brown & Root LLC bribed Nigerian government officials over […]
978-0077862213 Chapter 6 Case Kay Lee
Case 6- 8 Kay & Lee LLP Kay and Lee LLP has just been retained as the auditor for Holligan Industries to audit the financial statements required by a bank, Second National Bank & Trust, as a prerequisite to extending […]
978-0077862213 Chapter 6 Case Livingston Hayes Part 1
Case 6-7 Livingston & Haynes, P. C. This case concerns alleged violations of Section 10A of the Securities Exchange Act by Livingston & Haynes, P. C. (“L&H”), Howley and Wood in connection with L&H’s 2005 and 2006 year-end audits and […]
978-0077862213 Chapter 6 Case Livingston Hayes Part 2
Failure to Competently Evaluate Evidence Obtained by the Confirmation Process In general, it is presumed that audit evidence is more reliable when it is obtained from knowledgeable independent sources outside the entity. During the 2005 year-end audit, L&H failed to […]
978-0077862213 Chapter 6 Case Point Blank Solutions
Case 6-6 SEC v DHB Industries, Inc., n/k/a Point Blank Solutions, Inc Background In the past few years, the U.S. Securities and Exchange Commission has stepped up its enforcement actions against independent directors of publicly traded companies. While the commission […]
978-0077862213 Chapter 6 Case Reznor v JAM
Case 6-9 Reznor v. J. Artist Management (JAM), Inc. Michael Trent Reznor met John Malm Jr., a part-time promoter of local rock bands who also is a licensed CPA, in Cleveland, Ohio, in 1985. Malm became Reznor’s manager and formed […]
978-0077862213 Chapter 6 Case Vertical Pharmaceuticals
Case 6-5 Vertical Pharmaceuticals Inc. et al v. Deloitte & Touche LLP On December 13, 2012, Vertical Pharmaceuticals Inc. and an affiliated company sued Deloitte & Touche LLP in New Jersey state court for alleged accountant malpractice, claiming the firm’s […]
978-0077862213 Chapter 6 Case Zurich Financial Services
Case 6-10 SEC v. Zurich Financial Services Background On December 11, 2008, the SEC reached agreement with Zurich Financial Services (Zurich) to settle the commission’s charges against Zurich Financial Services Group for aiding and abetting a fraud by Converium Holding […]
978-0077862213 Chapter 6 Solution Manual Part 1
Chapter 6 Discussion Questions 1. Distinguish between common-law liability and statutory liability for auditors. What is the basis for the difference in liability? Common law liability arises from legal opinions issued by judges in deciding cases. These opinions become legal […]
978-0077862213 Chapter 6 Solution Manual Part 2
14. Some auditors claim that increased exposure under Section 404 of the SOX creates a litigation environment that is unfairly risky for auditors. Do you think that the inability of auditors to detect a financial statement misstatement due to internal […]
978-0077862213 Chapter 7 Case Cubbies Cable
Case 7-3 Cubbies Cable Ernie Binks is a big baseball fan, so it is quite natural for him, at a time like this, to recall a phrase attributed to Yogi Berra: “It was déjà vu all over again.” Binks is […]
978-0077862213 Chapter 7 Case Dell Computer
Case 7-5 Dell Computer Background For years, Dell’s seemingly magical power to squeeze efficiencies out of its supply chain and drive down costs made it a darling of the financial markets. Now we learn that the magic was at least […]
978-0077862213 Chapter 7 Case Diamond Foods
Case 7-8 Diamond Foods On November 14, 2012, Diamond Foods Inc. disclosed restated financial statements tied to an accounting scandal that reduced its earnings during the first three quarters of 2012 as it took significant charges related to improper accounting […]
978-0077862213 Chapter 7 Case Nortel Networks
Case 7-1 Nortel Networks Canada-based Nortel Networks was one of the largest telecommunications equipment companies in the world prior to its filing for bankruptcy protection on January 14, 2009, in the United States, Canada, and Europe. The company had been […]
978-0077862213 Chapter 7 Case North Face
Case 7-9 The North Face, Inc. The North Face, Inc. (North Face) is an American outdoor product company specializing in outerwear, fleece, coats, shirts, footwear, and equipment such as backpacks, tents, and sleeping bags. North Face sells clothing and equipment […]
978-0077862213 Chapter 7 Case Solutions Network
Case 7-2 Solutions Network, Inc. “We can’t recognize revenue immediately, Paul, since we agreed to buy similar software from Data Systems Solutions (DSS),” Sarah Young stated. “That’s ridiculous,” Paul Henley replied. “Get your head out of the sand, Sarah, before […]
978-0077862213 Chapter 7 Case Solway
Case 7-4 Solway, Inc. Ben Davis is an internal accountant at Solway Inc.., a publicly-owned company headquartered in Austin, California. Ben reports to Chris Hodgins, the controller of the company. Hodgins reports to the CFO, Harry Benson. Benson reports to […]
978-0077862213 Chapter 7 Case Sunbeam
Case 7-7 Sunbeam Corporation One of the earliest frauds during the late 1990s and early 2000s was at Sunbeam. The SEC alleged in its charges against Sunbeam that top management engaged in a scheme to fraudulently misrepresent Sunbeam’s operating results […]
978-0077862213 Chapter 7 Case Sweat Construction
Case 7-6 Sweat Construction Company During the past few years due to increasing competition, Sweat Construction Company has been more aggressive in seeking out new business opportunities. One such opportunity is the Computer Assistance Vocational Training School. It has contracted […]
978-0077862213 Chapter 7 Case Vivendi Universal
Case 7-10 Vivendi Universal “Some of my management decisions turned wrong, but fraud? Never, never, never.” This statement was made by the former CEO of Vivendi Universal, Jean-Marie Messier, as he took the stand in November 20, 2009, for a […]
978-0077862213 Chapter 7 Solution Manual Part 1
Chapter 7 Discussion Questions 1. In Arthur Levitt’s speech that was referred to in the opening quote he also said: “…I fear that we are witnessing an erosion in the quality of earnings, and therefore, the quality of financial reporting. […]
978-0077862213 Chapter 7 Solution Manual Part 2
11. Safety-Kleen is a North American company that offers environmental products and services. The company issued a major financial restatement in 2001. In 2000, the company’s board of directors initiated an investigation of possible accounting fraud within the company. The […]
978-0077862213 Chapter 8 Case Autonomy
Case 8-5 Autonomy Background On November 20, 2012, Hewlett-Packard (HP) disclosed that it had discovered an accounting fraud and has written down $8.8 billion of the value of Autonomy, the British software company it bought in 2011 for $11.1 billion, […]
978-0077862213 Chapter 8 Case Olympus
Case 8-6 Olympus Summary of the Case On September 25, 2012, Japanese camera and medical equipment maker Olympus Corporation and three of its former executives pleaded guilty to charges related to a $1.7 billion accounting cover-up in one of Japan’s […]
978-0077862213 Chapter 8 Case Parmalat Part 1
Case 8-2 Parmalat: Europe’s Enron After the news broke about the frauds at Enron and WorldCom in the U.S., there were those in Europe who used the occasion to beat the drum: “Our Principles-based approach to accounting standard-setting is better […]
978-0077862213 Chapter 8 Case Parmalat Part 2
Failure of the Board The statutory board is intended to act as a fundamental monitor within the company and check that the board of directors is complying with laws in their actions and decisions. The Parmalat board of statutory auditors […]
978-0077862213 Chapter 8 Case Royal Dutch Shell Part 1
Case 8-4 Royal Dutch Shell plc From 1907 until 2005, Royal Dutch Petroleum Company, a Netherlands-based company, and the Shell Transport and Trading Company, plc, a UK-based company, were the two public parent companies of a group of companies known […]
978-0077862213 Chapter 8 Case Royal Dutch Shell Part 2
Specific SEC Charges The SEC Complaint alleged the following: 1. As a result of Shell’s knowing or reckless overstatement of their oil and gas reserves in their financial statements, the group’s commission filings, specified previously, as well as other public […]
978-0077862213 Chapter 8 Case Satyam Part 1
Case 8-3 Satyam: India’s Enron Satyam Computer Services, now Mahindra Satyam, is an India-based global business and information technology services company that specializes in consulting, systems integration, and outsourcing solutions. The company was the fourth largest software exporter in India […]
978-0077862213 Chapter 8 Case Satyam Part 2
Class Action Lawsuits in the U.S. On January 11, 2010, India asked the authorities in the U.S. to not take any action against Satyam, as it would amount to punishing shareholders twice. Satyam can face punitive action in the U.S. […]
978-0077862213 Chapter 8 Solution Manual Part 1
Chapter 8 Discussion Questions 1. In this chapter we discuss problems encountered by the PCAOB in gaining access to inspect work papers of audits by U.S. international accounting firms of Chinese companies. Explain why these problems exist including cultural, legal, […]
978-0077862213 Chapter 8 Solution Manual Part 2
9. What is the difference between legal and ethical compliance with corporate governance provisions? Discuss what might be the ethical compliance mechanisms from a virtue ethics perspective. Legal compliance with corporate governance creates a minimum set of standards and is […]
978-0077862213 Major Case Teaching Note Adelphia
Notes on Major Case 1 Adelphia Communications Corp This case discusses a complex and high risk audit engagement. The auditors had to consider related party transactions and their effect on the application of GAAP and footnote disclosures. The case deals […]
978-0077862213 Major Case Teaching Note Cendant
Notes on Major Case 4 Cendant Corporation Ethical Issues: This case centers on a variety of accounting issues that illustrate the lengths to which a company can go to manipulate earnings. Cendant manipulated membership revenue; improperly recorded merger and purchase […]
978-0077862213 Major Case Teaching Note Micro Strategy
Notes on Major Case 3 MicroStrategy Ethical Issues: This case centers revenue recognition at MicroStrategy in 1997 to 1999. It provides an opportunity to discuss revenue recognition in the high tech industry and how to recognize revenue when the sales […]
978-0077862213 Major Case Teaching Note Navistar
Notes on Major Case 5 Navistar International This case discusses a complex and high risk audit engagement. The case looks at the consulting and auditing of complex audit issues. Ethical Issues: Deloitte had a duty and obligation of independence and […]
978-0077862213 Major Case Teaching Note Royal Ahold
Royal Ahold (“Ahold”) Ethical Issues Ahold had a very corrupt tone at the top which was evidenced by the actions of their former top executives who committed multiple acts of fraud within the company. With an unsuitable tone at the […]
978-0077862213 Major Case Teaching Note Waste Managment
Notes on Major Case 6 Waste Management Ethical Issues: The Principle of Due Care in the AICPA Code of Professional Conduct obligates a CPA to perform services with competence and diligence and with concern for the best interest of investors […]
BUS 19057
An important issue in the HP case with “event hostess” Jodie Fisher is: A. Conflict of interest of Mark Hurd B. Alleged sexual harassment of Jodi Fisher C. Disclosure of confidential client information by Hurd to Fisher D. All of […]
BUS 26552
Which of the following is not true of “reasonable assurance”? A. The auditors have exercised due care B. The audit opinion is a guarantee that material misstatements have been identified C. The audit has been properly planned and supervised D. […]
BUS 32802
A client asks his accountant to ignore a mistake which overstated the accounts receivable account. The accountant decides that the accounts receivable account has to be corrected to state the correct amount. The accountant makes his decision based on his […]
BUS 41300
Thorne’s “Integrated Model of Ethical Decision Making” can best be described as: A. A depiction of a model of moral development B. A depiction of how the Principles in the AICPA Code of Professional Conduct influences decision making C. A […]
BUS 44684
The philosophical belief that you should judge the result, not the action (end justifies the means) is? A. Utilitarianism B. Deontology C. Justice D. Virtue ethics Answer: Kohlberg’s model can best be described as: A. The various phases in one’s […]
BUS 52612
CPAs can advertise and solicit clients as long as such practices are: A. Conducted in a professional manner B. Informative about the CPA’s services C. Not conducted in a misleading or deceptive manner D. Paid for by outside parties Answer: […]
BUS 98142
The Private Securities Litigation Reform Act of 1995 applies the practice of ______ to auditor liability determinations. A. Risk assessment B. Fraud triangle C. Lowballing D. Proportionate liability Answer: Responsibility goes hand in hand with: A. Respect B. Loyalty C. […]
Business 23712
Each of the following is a pillar of corporate governance except for: A. Responsibility B. Accountability C. Fairness D. Independence Answer: What ethical rules are violated when a CPA auditing a client provides inside information about the client to a […]
Business 27283
The duty of loyalty requires directors to A. Act in the best interests of the corporation B. Act in the best interests of the shareholder C. Act in the best interests of management D. All of these Answer: Each of […]
Business 29331
The Olympus case deals with which of the following accounting issues: A. Booking impairment losses B. Selling bad assets to make investment losses smaller C. Concealing investment losses D. All of these Answer: Some critics claim the usefulness of the […]
Business 31058
The biggest problem in applying virtue theory to decision making is: A. It can be difficult to evaluate the effect of virtues on others in decision making B. It relies on moral absolutes in decision making C. It can be […]
Business 35763
Sally is the only student from a foreign country in an Auditing class. On the day of the midterm exam, Sally asks the teacher whether she could use a dictionary to translate English words to her native tongue so she […]
Business 56776
In the Bhopal case, in evaluating its exposure to possible future liability due to technology failures, Union Carbide used which of the following concepts: A. Professional skepticism B. Business risk C. Cost-benefit analysis D. Rights Theory Answer: Respect is an […]
Business 69477
Each of the following is a safeguard that helps to mitigate threats to independence except for: A. Safeguards created by the profession, legislation, or regulation B. Safeguards implemented by the attest client, such as a tone at the top C. […]
Business 78893
A unique aspect of occupational fraud is: A. The misuse of company assets B. The falsification of financial statements C. The failure to disclose full and complete information D. All of these Answer: A similarity between the Bernie Madoff situation […]
Business 84896
The COSO report states that management should enact five components related to internal control objectives including each of the following except for: A. Control environment B. Risk assessment C. Risk activities D. Monitoring Answer: What is the difference on contingent […]