Unit 5 Assignment
150 Points
Due 11/9/15
Please read the casesI have indicated relevant professional standards you might research for this assignment.I suggest you also peruse the links on the readings and websites page when preparing this assignment.
Relevant professional standards for this assignment may include:
AICPA ASB Standards:AU-C Section 240 “Consideration of Fraud in a Financial Statement Audit,”AU-C Section 315″Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement,”AU-C 330, “Performing Audit Procedures in Response to Assessed Risks and Evaluatingthe Audit Evidence.”
PCAOB Standards: AS8, “Audit Risk,” AS12, “Identifying and Assessing Risks of Material
Misstatement,” AS13, “The Auditor’s Responses to the Risks of Material Misstatement,” and AS14,“Evaluating Audit Results.”Interim AICPA Standards AU 316 and AU 317.
There are4 parts to this assignment.
1. (8 pts) Case 1.6 NextCard, Inc. (you read this case in Unit 1)
a. Discuss the fraud risk factors that were evident for the 2000 audit.
b. What could (should?) the auditors have done to address these fraud risk factors in the audit planning and implementation?
Be specific with respect to NextCard. (Refer to the above standards although not in effect at the time of this case).
2. (8 pts) Case 2.5Lipper Holdings, LLC
a. Using hindsight (which is 20/20, of course!), list and discusssome of the specific fraud factors at Lipper that should have served as red flags to the auditors, PwC.
b. What could (should?) the auditors have done to address these fraud risk factors in the audit planning and implementation?
Be specific with respect to Lipper. (Refer to the above standardsalthough not in effect at the time of this case).
3. (8 pts) Case 1.10 DHB Industries, Inc.(you read this case in Unit 1)
a. List and discuss some of the specific fraud factors at DHB that should have served as red flags to the auditors.
b. What could (should?) the auditors have done to address these fraud risk factors in the audit planning and implementation? Be specific with respect to DHB.Refer to the above standards.
4. (6 pts)
a. What responsibility does an auditor have to uncover fraud perpetrated by client management?
b. What responsibility does an auditor of a public company have if he/she discovers an illegal act by the client?