Week 4 assignment 2 – auditors and regulatory oversight

 The Securities and Exchange Commission (SEC) regulates public  companies. The SEC has found that some of these companies have violated  GAAP by using creative accounting practices to mislead investors and  creditors regarding the health of their company.

Use the Internet or Strayer Library  to research a recent accounting scandal within the last five years  where the SEC accused public companies of accounting irregularities.

Instructions

Write a 3–4 page paper in which you:

1. Analyze the audit report that the CPA firm issued. Ascertain  the legal liability to third parties who relied on financial statements  under both common and federal securities laws. Justify your response.
2. Speculate on which statement of generally accepted auditing standards (GAAS) that the company violated in performing the audit.
3. Compare the responsibility of both management and the auditor  for financial reporting, and give your opinion as to which party should  have the greater burden. Defend your position.
4. Analyze the sanctions available under SOX, and recommend the  key action or actions that the PCAOB should take in order to hold  management or the audit firm accountable for the accounting  irregularities. Provide a rationale for your response.
5. Use the Strayer Library  to locate at least two quality academic resources in this assignment.  Note: Wikipedia and other similar websites do not qualify as academic  resources.

This course requires the use of Strayer Writing Standards. For  assistance and information, please refer to the Strayer Writing  Standards link in the left-hand menu of your course. Check with your  professor for any additional instructions.

The specific course learning outcome associated with this assignment is:

• Recommend sanctions for accounting irregularities based on an  audit report, auditing standards, and financial reporting  responsibilities.

First and  foremost, you’ll need to select a recent case of accounting violations  (i.e. fraud, restatements due to the incorrect application of GAAP,  etc.), one reported in 2014 or after (trust me, there are tons of them).

Next, you’re going to use that case as the basis for your paper in  which you address four key sections. To ensure that you’re giving each  section adequate attention, I recommend labeling the sections in your  paper (i.e. Section 1, Section 2, etc.). In summary, the four sections  are:

1. Analyze the audit report that the CPA firm issued. Ascertain the  legal liability to third parties who relied on financial statements  under both common and federal securities laws.   
2. Speculate on which standard of generally acceptable auditing  standards (GAAS) that the company violated in performing the audit.  [Remember that we have studied these standards extensively.]   
3. Compare the responsibility of both management and the auditor  for financial reporting and give your opinion as to which party should  have the greater burden.   
4. Analyze the sanctions available under SOX and recommend the  key action(s) that the PCAOB should take in order to hold management or  the audit firm accountable for the accounting irregularities.  

I have a couple of other recommendations to help to ensure that you earn maximum credit on the assignment:

• Provide a short but inviting introduction paragraph that introduces your reader to the topics that you’ll be discussing.   
• Address each of the four sections completely and thoroughly  using your own words and analysis as much as possible (limit the use of  direct quotations).   
• Prepare a clear and concise summary paragraph that highlights your conclusions based on the analysis of each section.