Completing an Ethics Case

To complete this assignment, you will write a paper focused on auditor ethics. Make sure to:

Select an audit case from the

list of research cases

provided, or select one that you prefer.

Research the situation using internet resources like the SEC or PCAOB enforcement actions web pages. The listed cases will also have newspaper and journal articles available.

1. Describe the AUDITOR ethical situation you find. Remember that many/most of these cases also have an ethical component related to the client’s managers. The paper is to focus on the auditor ethics. Of course, you may need a brief explanation of what management did that created an ethical dilemma for an auditor. For example, management created a cookie jar reserve. The purposely non-GAAP financial statement in itself is an ethical problem on the part of the client. Certainly, management’s improper action is to be discussed briefly. The paper’s main focus should be on what the auditors did about that cookie jar.

Research the Audit Standards that pertain to the situation. There may be several that apply. Write up which standards apply and explain why they are appropriate to the situation.

1. Describe how the auditor did or did not follow the applicable standards.
2. Discuss any consequences the auditor experienced as a result of any ethics lapse.
3. Explain what an auditor should have done and how this might apply to you in the future as an audit professional.

Available Ethics Research Cases
(you may also select your own)
Auditor
Firm
Scott London
KPMG
Davis Friehling
Friehling
Horowitz
Deloitte
Richard Fiedelman
Client
Issue
Skechers
& Insider Trading
Herbalife
& Madoff Securities Everything
New Century
Unqualified Opinion on NonGAAP
FS
Noncompliance
with
audit
standards
Inadequate Planning
Richard
Mayock/Mike PWC
McColgan
George Mark
BDO
AIG
Objectivity
Le-Nature
Randall A. Stone
James T Adams
PWC
Deloitte
Tax fraud found during audit
fraud investigation!
Ignoring unusual transactions
independence
Christopher E Anderson
Deloitte
Ryan Adams
PWC
Arthrocare
Caesar’s
Entertainment
Navistar Financial Materiality
Corporation
Marin Software
Independence
Peter Behrens
John Donovan
Grant
Thornton
KPMG
North Face
MCA
Anderson, Butler, Christi, EY
Thibault
Gaughan & Scanlan
PWC
Medici
Pharmaceutical
WR Grace
No Professional Skepticism
San Diego Office
Deloitte
Tom Flanagan
Deloitte
Failure of Due Professional care –
did not catch channel stuffing
Insider trading
Carpenter, Fletchall, et al.
EY
Ligand
Pharmaceutical
Best
Buy/Walgreens
Bally
Dennis O’Hogan
EY
SmartForce
Failed professional care
Materiality
Lack of due diligence