A: Research an accounting firm or auditors who failed to collect sufficient appropriate evidence. B: Evaluating...

A: Research an accounting firm or auditors who failed to collect sufficient appropriate evidence.

B: Evaluating management integrity is critical in assessing business risk. Please comment.

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Answer :

A - PricewaterhouseCoopers house in a well knows "Satyam Scam" failed to get the appropriate audit evidence. The auditor has relied upon the company which has shown them millions of dollar fake Fixed deposits and such deposit was actually not available in the physical form and the company reported that all Fixed deposit receipts are burn in the fire and FIR has been logged.

As per the Economic times "Price Waterhouse, the firm that audited the accounts of Satyam Computers, may have been misled into believing forged documents that sought to verify the existence of 175-odd fixed deposit receipts, valued at over Rs 3,319 crore (Rs 33.19 billion), and all the company's current account deposits. The details of the FDRs, which Price Waterhouse had physically verified, show that most of these instruments were due for redemption between October 2008 and February 2009. The Satyam accounts were audited for the period ended September 30, 2008."

The auditor of the PWC was barred for not performing the work with laid down procedures and the auditor can sense the misstatement by just enquired more about the data but failed to do that. For this PWC India was banned by the Security Exchange Board of India for two years.

The auditor is just like watchdog if they failed to get the evidence required, the whole auditing system gets collapsed.

Note: Please upload the B part as separate, as it is an Independent question Positive feedback will be highly appreciated. If you need any further help or clarification related to this question please do comment in the comment section. Thanks

ekkarill92 answered 2 years ago

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