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Auditing & Assurance Services II Dr. Mohannad Atmeh

Xerox Corporation

German Jordanian University

School of Management and Logistics Sciences

Auditing and Assurance Services II

Dr. Mohannad Atmeh

Abstract:

This handout will handle the case of Xerox Corporation and KPMG. It will clarify every point regarding

their fraud. It will (rst give a brief and sophisticated overview about the case of Xerox and what

happened. It will then show a brief comparison using financial ratios between HP Corporation and

Auditing & Assurance Services II Dr. Mohannad Atmeh

Xerox through the years 1997 to 2000. A0erwards, this paper is going to clarify what the auditor’s

responsibilities are. Furthermore, this handout shows the factors of fraud that a4ect (nancial

reporting and the fraud triangle since the auditor should consider when auditing. A0er taking a

glimpse on what have been stated the questionable accounting manipulations that involve

estimation is shown. Auditor’s responsibilities with respect to AU342 are then given. As on the

middle stage of this essay, the procedures audit firm consider instituting to reduce the likelihood of

audit (rm subordinating their judgements to client preferences are given. Then, accounts a4ected

from questionable accounting manipulations and which audit procedure to use are stated. The

auditor’s responsibility considering reserves are then given since it is an essential part in such case.

Last but not least, KPMG’s se:lement is then explained brie;y. Lastly, the compensation levels are

then explained given an opinion from the writer’s perspective.

Introduction:

Auditing is an essential service to all Corporations around the world. The case of Xerox in 2000 is a bit

sophisticated but should be explained to all who it may concern since it covers the required material

to beginners in auditing procedures. Without going into details, Xerox has been a star in the

technology sector of the economy and found itself faced with accounting scandal since it was too

aggressive in recognizing equipment revenue. The Securities and Exchange Commission (SEC) stated

Xerox used a variety of accounting manipulations over the period 1997 through 2000 to meet Wall