ACC 546 Education Organization- tutorialrank.com

1. ACC 546 All Assignments For more course tutorials visit www.tutorialrank.com Please check All Included Assignments Below ACC 546 Individual Assignment Evaluating the Case Against Lehman Brothers ACC 546 Case 3.3 The Anonymous Caller ACC 546 Assignment Burlington Bees ACC 546 Week 1 Assignment Avoiding Bias Paper ACC 546 Individual Assignment 1.1 Ocean Manufacturing, Inc ACC 546 Laramie Wire Manufacturing Assignment

2. ACC 546 Individual Assignment Case 5.6 SarboxScooter, Inc. ACC 546 Individual Assignment Case 5.3 Red Bluff Inn & Cafe ACC 546 Case 4.1 Enron Corporation & Andersen, LLP ACC 546 Case 7.1 Anne Aylor, Inc ACC 546 Case 5.1 Simply Steam, Co. ACC 546 Case 2.2 Apple Inc. ACC 546 Case 10.4 and 10.5 Southeast Shoe Distributor, Inc (Score 100%) ACC 546 Case 9.7 RedPack Beer Company ACC 546 CASE 9.1 Wally’s Billboard & Sign Supply ACC 546 Case 9.3 Longeta Corporation

3. ACC 546 Case 9.4 Bud's Big Blue Manufacturing ACC 546 Case 11.1 The Runners Shop ACC 546 Case 12.2 Auto Parts. Inc ACC 546 Case 12.4 Surfer Dude Duds, Inc ACC 546 Case 12.1 EyeMax Corporation ============================================== ACC 546 Assignment Burlington Bees For more course tutorials visit www.tutorialrank.com [1] Research auditing professional standards and list the requirements related to developing an expectation and conducting analytical procedures when those procedures are intended to provide substantive

4. evidence. What are the advantages of developing an expectation at a detailed level (i.e., using disaggregated data) rather than at an overall or aggregated level? [2] Using the information provided, please develop a precise expectation (i.e., using the detailed or disaggregated data provided) for ticket revenues for the 2014 fiscal year. [3] (A) what are the advantages of using analytical procedures as substantive tests? (b) If the engagement team decides to use analytical procedures for the Bees’ audit, how will the audit plan differ from prior years? (c) Discuss whether you believe analytical procedures should be used as substantive tests for the Bees 2014 audit? [4] (A) how close does the Bees’ reported ticket revenue for 2014 have to be to your expectation for you to consider reported ticket revenue reasonable or fairly stated? (b) If reported ticket revenues were outside your ―reasonableness range,‖ what could explain the difference? ============================================== ACC 546 Case 2.2 Apple Inc.

5. For more course tutorials visit www.tutorialrank.com CASE 2.2 Apple Inc. Evaluation of Client Business Risk After completing and discussing this case you should be able to [1] Describe the implications of an audit client’s business risk on the audit engagement [2] Describe the types of information relevant to evaluate an audit client’s business risk [3] Identify and evaluate the factors important in assessing an audit client’s business risk and risk of material financial misstatement INTRODUCTION1 [a] Apple’s:

6. ■ Sales ■ Net income ■ Cash flow from operating activities ■ Total assets ■ Number of employees [b] What are Apple’s products? [c] Who are Apple’s competitors? [d] Who are Apple’s customers? [e] Who are Apple’s suppliers? [f] How does Apple market and distribute its products?

7. [g] What is Apple’s basic business strategy (cost leadership or differentiation)? [h] What are critical business processes for Apple given its basic business strategy (for example, supply chain management)? [i] What accounting information is associated with the critical business processes and how does Apple measure up on that information? [j] What accounting methods does Apple use to report the accounting information associated with critical business processes and what is the risk of material misstatement? This memo is to be used as a foundation document for the preliminary business risk assessment. In evaluating Apple’s performance and assessing the risk of misstatement, please be sure to describe your reasoning. Your memo should be double-spaced and addressed to the partner for the engagement (your instructor). Your firm demands polished, concise, professional analyses and writing. Be thorough, but get to the issues without unnecessary verbiage. In describing your analyses and conclusions, please consider relatively short ―punchy‖ or to-the-point sentences. When appropriate, consider using bullet point listings. [2] Professional auditing standards provide guidance on the auditor’s consideration of an entity’s business risks. What is the auditor’s

8. objective for understanding an entity’s business risks? Why does an auditor not have responsibility to identify or assess all business risks? Provide some examples of business risks associated with an entity that an auditor should consider when performing an audit. Smith and Jones, PA. Memorandum: Business Risk Evaluation ============================================== ACC 546 Case 3.3 The Anonymous Caller For more course tutorials visit www.tutorialrank.com Case 3.3 The Anonymous Caller, p. 63-65 [1] Do you think situations like this (i.e., aggressive accounting or even financial statement fraud) are common in practice? [2] Which financial statement assertion related to sales transactions did management violate when it issued the falsified financial statements?

9. [3] The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) recently completed a joint project to develop a common revenue standard for U.S. GAAP and IFRS to improve revenue recognition practices and to remove inconsistencies and weaknesses in revenue requirements. The updated guidance is contained in the Accounting Standards Codification as Topic 606, Revenue from Contracts with Customers. Review that guidance to summarize the core principle for recognizing revenue and briefly describe the five steps needed to achieve the core principle. Also, describe how the core principle was not achieved in this situation. [4] What types of audit procedures could an external auditor perform that might help the auditor detect this fraudulent activity? [5] People who study instances of financial statement fraud often note that three conditions are generally present for fraud to occur. First, the person perpetrating the fraud has an incentive or pressure to engage in fraud. Second, there is an opportunity for that person to carry out the fraud. Third, the person’s attitude or ethical values allows the perpetrator to rationalize the unethical behavior. Describe examples of incentive, opportunity, and attitude conditions that were present in this situation. [6] In 2014, the AICPA’s Professional Ethics Executive Committee adopted a revised Code of Professional Conduct that is effective December 15, 2014. Briefly describe how the new Code is structured and indicate where would you find guidance about the importance of integrity.

10. [7] (a) What would you recommend to the caller if you were Dr. Mitchell? (b) What are the risks of continuing to work with the company? (c) What are the risks of resigning immediately? [8] What responsibility, if any, does the caller have to report this situation directly to the bank involved? Before you respond, think about the risks present if the caller does inform the bank and it later turns out that the caller’s assessment of the situation was inaccurate, i.e., there was no fraud. [9] (a) What other parties, if any, should be notified in addition to the bank? (b) What concerns do you have about notifying the external auditors? [10] (a) What pressures or factors will executives use to encourage accounting managers and staff to go along with this type of situation? (b) What arguments can you use to resist those pressures? (c) How does one determine whether a company is aggressively reporting, but still in the guidelines of GAAP, versus fraudulently reporting financial information? PROFESSIONAL JUDGMENT QUESTIONS It is recommended that you read the Professional Judgment Introduction found at the beginning of the book prior to responding to the following questions.

11. ============================================== ACC 546 Case 5.1 Simply Steam, Co. For more course tutorials visit www.tutorialrank.com Commitment to Integrity and Ethical Values Board of Directors Demonstrates Independence and Appropriate Oversight Management’s Philosophy and Operating Style Management Establishes Structure and Reporting Lines to Achieve Objectives Financial Reporting Competencies The Organization Holds Individuals Accountable to Their Internal Control Responsibility Evaluation of Simply Steam, Co. as to demonstrating a commitment to attract, develop, and retain competent individuals Overall evaluation of the Control Environment

12. ============================================== ACC 546 Case 7.1 Anne Aylor, Inc For more course tutorials visit www.tutorialrank.com ACC 546 Case 7.1 Anne Aylor, Inc. [a] Why are different materiality bases considered when determining planning materiality? [b] Why are different materiality thresholds relevant for different audit engagements? [c] Why is the materiality base that results in the smallest threshold generally used for planning purposes? D. Why is the risk of management fraud considered when determining performance materiality?

13. E. Why might an auditor not use the same performance materiality amount or percentage of account balance for all financial statement accounts? F) Why does the combined total of individual account performance materiality commonly exceed the estimate of planning materiality? G) Why might certain trial balance amounts be projected when considering planning materiality? [2] Based on your review of the Exhibits (1 and 2) and audit memos (G- 3 and G-4), complete audit schedules G-5, G-6 and G-7. ============================================== ACC 546 CASE 9.1 Wally’s Billboard & Sign Supply For more course tutorials visit www.tutorialrank.com CASE 9.1 Wally’s Billboard & Sign Supply

14. After completing the audit program, answer the following questions: [1] Why is the audit of cash an important part of the audit? [2] Bill performed tests of controls for all transaction cycles with good results. Why is it important to also perform substantive audit procedures for the ending cash balance even when tests of controls over transactions that affect the cash account indicate that those controls are operating effectively? [3] According to AICPA auditing standards, what are the necessary ingredients for audit evidence to be considered ―appropriate‖? [4] For each procedure listed in the audit program (schedule C 2), indicate the primary assertion(s) targeted by the procedure. [5] For each error, concern, or adjustment you listed on the Audit Summary (schedule C 3), briefly describe at least one additional test you could perform to gain evidence as to whether or not the cash account is materially misstated. [6] The AICPA and the American Banker’s Association developed a standardized bank confirmation form—see working paper C 6. What is the purpose for confirming information in item number two on the bank confirmation form? Identify the accounts and related audit assertion(s) to which the information in item number two is relevant. [7] What audit procedures might you perform if you were to decide that the risk of fraud involving the cash account was relatively high for this client? [8] Perform an online search for ―electronic bank confirmations.‖ Summarize in one page or less what you learn about recent developments in the use of web-based bank confirmations. Include a

15. brief discussion of the advantages of electronic confirmations in your write-up. ============================================== ACC 546 Case 9.3 Longeta Corporation For more course tutorials visit www.tutorialrank.com Case 9.3 Longeta Corporation overs auditing revenue contracts. You want to be thoroughly prepared for the meeting with the audit manager. Perform the following procedures to be certain you have all necessary information about the transaction’s treatment. [1] The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) recently completed a joint project to develop a common revenue standard for U.S. GAAP and IFRS to improve revenue recognition practices and to remove inconsistencies and weaknesses in revenue requirements. The updated guidance is contained in the Accounting Standards Codification as Topic 606, ―Revenue from Contracts with Customers.‖ Review that guidance to summarize the core principle for recognizing revenue and briefly

16. describe the five steps needed to achieve the core principle. Also, describe how the core principle was not achieved in this situation. [2] In your own words, explain the company’s reasoning for recording $5.8 million as current revenue while recording the remaining $1.2 million as deferred revenue. Also, document where on the financial statements the deferred revenue account would be presented. [3] Assess the content of the separate letter issued by Longeta’s vice president of sales to Magicon. Document your conclusion about how the content of the letter affects or does not affect revenue recognition for Longeta for the year ended September 30, 2015. [4] Given that the letter from the vice president of sales was not attached to or documented in the order letter submitted by Magicon to Longeta, document your conclusion as to the impact, if any, the vice president’s letter has on the accounting treatment for the transaction since it was not part of the order letter. [5] Research PCAOB Auditing Standards on the PCAOB’s website (www.pcaob.org) to summarize the guidance for auditors in regards to their assessment of the risk of material misstatement related to revenue recognition. What do those standards require of auditors in regards to their assessment of risk related to revenue recognition? [6] Auditing standards describe three conditions that are usually found to be present. What are those three conditions and what red flags, if any, might be present at Longeta? [7] The separate letter from the vice president of sales was emailed and faxed to Magicon representatives. What would be the impact if Longeta’s vice president had only provided that information orally to

17. Magicon representatives and not forwarded the information in written form? [8] As of September 30, 2015, Magicon had only submitted the order letter. Document your conclusion about the impact on the accounting for the transaction if Longeta and Magicon (a) sign the reseller agreement within 30 days or (b) do not sign the reseller agreement within 30 days. [9] Document your final conclusion about the accounting treatment of this transaction between Longeta and Magicon. Be sure to provide a basis for your conclusion. PROFESSIONAL JUDGMENT QUESTION It is recommended that you read the Professional Judgment Introduction found at the beginning of the book prior to responding to the following question. [10] One of the environmental factors affecting judgment is the ―rush to solve‖ judgment trap. Briefly describe the trap and how it applies to the situation affecting the recording of the sales transaction. ============================================== ACC 546 Case 9.4 Bud's Big Blue Manufacturing For more course tutorials visit

18. www.tutorialrank.com Case 9.4 Bud's Big Blue Manufacturing covers accounts receivable confirmations REQUIRED [1] List the four factors auditors should consider when evaluating the results of confirmation procedures. Also, what are three of the characteristics of a reliable confirmation? (For this and other questions, you may wish to refer relevant auditing standards). [2] What does it mean to ―maintain control‖ over the confirmation requests and responses? What could go wrong if the auditor doesn’t maintain control over the confirmation process? [3] Complete the audit log provided on the next page for each of the seven remaining confirmations. Consider whether each confirmation provides sufficient, appropriate audit evidence, whether sufficient alternative procedures have been performed for non-responses, and whether additional procedures should be performed before concluding that the confirmation provides evidence supporting the client’s account balance. Be as precise and concise as possible. [4] What is the difference between a positive and a negative confirmation? What are the advantages and disadvantages of each type? [5] Search the internet to identify a real-life situation where an auditor apparently did not maintain sufficient control over the confirmation process. Briefly describe the situation you found. PROFESSIONAL JUDGMENT QUESTION

19. It is recommended that you read the Professional Judgment Introduction found at the beginning of this book prior to responding to the following question. [6] After completing the confirmations review, your senior asks you to assess the reasonableness of the allowance for bad debts. Think about the anchoring tendency discussed in the Professional Judgment Introduction. How could the anchoring tendency bias your reasonableness assessment? What are some ways that you could mitigate the possible effects of the anchoring tendency in assessing the reasonableness of the allowance? ============================================== ACC 546 Case 9.7 RedPack Beer Company For more course tutorials visit www.tutorialrank.com Case 9.7 RedPack Beer Company covers estimating allowance for bad debt [2] Following your analysis of the information in Schedules A-D, assume that you met with RedPack’s Credit Manager, Katie Henson, to

20. ask her a number of questions related to specific customer accounts in the Accounts Receivable Aged Trial Balance. A transcript of your interview notes is provided as Schedule E. Use that information to address the following: [a] Based on your reading of the transcript, do you agree with the specific reserves established by the credit manager for Distinct Beer Distributor, Eagle Beverage Group, and Golden Holdings? If yes why? If no what do you believe the specific reserves should be and why? [b] Based on your reading of the transcript discussion, would you have any concerns with other aspects related to the reporting of revenues and accounts receivable? Explain your answer. [c] Based on the information you have, develop an estimate of the account balance for the allowance for bad debts and compare your expectation to the client’s estimate summarized in Schedule B for the allowance for bad debts. Does the amount you estimated agree with the client’s estimate in Schedule B? If it does not agree, by how much does it differ and is that difference material?

21. [d] Determine the adjusting journal entry(ies) needed, if any, to adjust management’s estimate of the reserve to your audited estimate and post your entries in the Adjustments column in Schedule A. [e] Based on your reading of the professional standards in requirement 1 above, what additional procedures would you need to perform to conclude on the adequacy of the allowance for bad debt? ============================================== ACC 546 Case 10.4 and 10.5 Southeast Shoe Distributor, Inc(Score 100%) For more course tutorials visit www.tutorialrank.com Week 5 Team Assignment Case 10.4 and 10.5 Southeast Shoe Distributor, Inc. 10.4 [2] Complete steps 1a-i from the audit program E 1-1 [3] Complete step 4a from the audit program E 1-1

22. 10.5 [1] Complete audit procedure 3a listed on audit program E 2. [2] Document your adjusting entries for any observed misstatements that you propose on schedule E 11. Then update the accounts payable lead schedule on audit schedule E 10 ============================================== ACC 546 Case 11.1 The Runners Shop For more course tutorials visit www.tutorialrank.com Week 6 Team Assignment, 1 Instructions: Review case 11.1 The Runners Shop p.379-391. CASE 11.1 The Runners Shop Briefly answer, required questions related to this case: 1-3 with approximately 30 to 45 words. REQUIRED

23. [1] Describe the purposes of audit documentation and explain why each purpose is important. [2] Review Green and Brown, LLP’s audit documentation guidelines and explain why an audit firm would want to include each of the listed items in its audit documentation. [3] Review the audit documentation prepared by Green and Brown, LLP, related to TRS’s Notes Payable and list deficiencies on the enclosed schedules. Will not accept plagiarized work from other sites, I could have done the same thing. ============================================== ACC 546 Case 12.1 EyeMax Corporation For more course tutorials visit www.tutorialrank.com Case 12.1 EyeMax Corporation – evaluating audit differences

24. Assume that you are the auditor responsible for the EyeMax audit. It is now March 30, and all planned fieldwork has been completed. Recall that total financial statement materiality has been set at $625,000. Taking into account the information provided, please answer the following question. [1] Which of the following three alternatives best describes the conditions under which you would issue a clean opinion for EyeMax? (select one) ____ a. I would not be willing to issue a clean opinion even if EyeMax is willing to make adjustments for items on the Summary of Unadjusted Misstatements. ____ b. I would be willing to issue a clean opinion without any adjustments. ____ c. I would be willing to issue a clean opinion only if EyeMax is willing to make some adjustments to their financial statements for items on the Summary of Unadjusted Misstatements. Briefly explainyour choice: [2] If you selected options ―a‖ or ―b‖ in question 1, assume now that the client has decided that they will make an adjustment of up to $250,000 to their financial statements. Please decompose the total adjustment you would recommend into the individual account classifications included on the Summary of Unadjusted Misstatements in the space provided below (e.g., what adjustment would you require for warranty expense, repair and maintenance expense, etc? The

25. dollar values of your individual account adjustments should sum to no more than $250,000). If you selected item ―c‖ in question 1, what is the minimum total adjustment that you would require before issuing a clean opinion? $________________Please decompose this total adjustment into the individual account classifications included on the Summary of Unadjusted Misstatements in the space provided below (e.g., what adjustment, if any, would you require for warranty expense, repair and maintenance expense, etc? The dollar values of your individual account adjustments should sum to your required minimum adjustment). Please briefly explain your decisions: ============================================== ACC 546 Case 12.2 Auto Parts. Inc For more course tutorials visit www.tutorialrank.com Case 12.2 Auto Parts. Inc. – materiality and evaluating accounting policies and footnote disclosures

26. [1] Describe whether you agree that capitalization of the tooling supplies is the preferable method of accounting for Auto Parts, Inc. [2] In general, how do auditors develop an estimate of financial statement materiality? For Auto Parts, Inc., what is your estimate of financial statement materiality? Are there qualitative factors that might impact your decision about the materiality of the accounting treatment and the related disclosure? [3] Assuming the policy change is considered material, how should it be reported and disclosed in the 2014 financial statements and what would be the effect, if any, of the accounting change on the auditor’s report? [4] Do you concur with management’s assessment that the accounting change is immaterial and, therefore, requires no disclosure? Why or why not? ============================================== ACC 546 Case 12.4 Surfer Dude Duds, Inc For more course tutorials visit www.tutorialrank.com ACC 546 Case 12.4 Surfer Dude Duds, Inc

27. [1] What are Scott’s options? [2] How might a going-concern explanatory paragraph become a ―self- fulfilling prophecy‖ for Surfer Dude? [3] Discuss the importance of full and accurate auditor reporting to the public, and describe possible consequences for both parties if the going- concern explanatory paragraph and footnote are excluded. How might Scott convince George that a going-concern report is in the best interests of all parties involved? [4] What potential implications arise for the accounting firm if they issue an unqualified report without the going-concern explanatory paragraph? [5] What factors might motivate Scott to be objective in his decision, despite his personal concern for his friend? [6] Is it appropriate for an audit partner to have a friendly personal relationship with a client? At what point could a personal relationship become an independence issue? [7] In your opinion, what should Scott do? Briefly justify your position and explain how you would approach George on Monday.

28. PROFESSIONAL JUDGMENT QUESTIONS It is recommended that you read the Professional Judgment Introduction found at the beginning of this book prior to responding to the following questions. [8] How is professional skepticism related to professional judgment? Describe a few factors that might be clouding Scott’s professional skepticism. [9] Consider the judgment trap of solving the wrong problem. What are some problems that Scott is trying to solve? What is the problem he should be trying to solve? Describe how he might reconcile the two objectives so that the problem becomes simpler to resolve? ============================================== ACC 546 Individual Assignment 1.1 Ocean Manufacturing, Inc For more course tutorials visit www.tutorialrank.com

29. 2. What nonfinancial matters should be considered before accepting Ocean as a client? How important are these issues to the client acceptance decision? Why? 5. (A). Prepare a memo to the partner making a recommendation as to whether Barnes and Fischer should or should not accept Ocean Manufacturing, Inc. as an audit client. Carefully justify your position in light of the information in the case. Include consideration of reasons both for and against acceptance and be sure to address both financial and nonfinancial issues to justify your recommendation. 6. (A). How might the confirmation tendency affect the client acceptance decision? 6. (B). How might the overconfidence tendency come into play in the client acceptance decision? ============================================== ACC 546 Individual Assignment Case 5.3 Red Bluff Inn & Cafe For more course tutorials visit www.tutorialrank.com

30. [1] What are your two biggest concerns relating to possible fraud for the café part of the business? For each concern, generate two or three controls that could effectively reduce risk related to your concerns. Use common sense and be creative! [2] What are your two biggest concerns relating to possible fraud for the motel part of the business? For each concern, generate two or three controls that could effectively reduce risk related to your concerns. Use common sense and be creative! [3] Describe the potential impact of your proposed controls on the morale of the couple in charge of the day-to-day operations. How might Francisco deal with these concerns? [4] Briefly describe the impact each proposed control would have on the efficiency of running the business. Are the controls you generated both effective and efficient? ============================================== ACC 546 Individual Assignment Case 5.6 SarboxScooter, Inc.

31. For more course tutorials visit www.tutorialrank.com Part A 1. According to AS5: a) What should the auditor consider when determining whether an account should be considered significant? b) What qualitative factors might cause an account that is otherwise relatively small quantitatively to be considered significant? c) What qualitative factors might cause an account that is greater than materiality to be considered not significant? 2. Auditing standards require the identification and testing of entity-level controls. What are examples of entity-level controls? What are the auditor’s responsibilities with respect to evaluating and testing a client’s period-end financial reporting process? Part B

32. 1. What are the definitions of a control deficiency, significant deficiency, and material weakness as contained in AS5? Which, if any, of these deficiency categories must the external auditor include in the audit report? ============================================== ACC 546 Individual Assignment Evaluating the Case Against Lehman Brothers For more course tutorials visit www.tutorialrank.com ACC 546 Individual Assignment Evaluating the Case Against Lehman Brothers The Case Against Lehman Brothers‖. Write a 750- to 1,050-word evaluation. Analyze and then summarize the responsibilities and failings of the firm, the firm’s accountants, and government regulators.

33. Provide an update in the case against the firm, its top executives, and accountants. Apply what you learned to your current or future profession. How will you integrate this knowledge to make you a better employee ============================================== ACC 546 Laramie Wire Manufacturing Assignment For more course tutorials visit www.tutorialrank.com ACC 546 Laramie Wire Manufacturing Assignment ============================================== ACC 546 Week 1 Assignment Avoiding Bias Paper For more course tutorials visit www.tutorialrank.com

34. Avoiding Bias Paper - Assessment Activity - Week1 - ACC/546 - eCampus Read the pages 1-9 section of Professional Judgment and distinguish the four tendencies toward professional judgment bias: 1. Availability Tendency 2. Confirmation Tendency 3. Overconfidence Tendency 4. Anchoring Tendency In a paper 750 to 1,050 words, evaluate how an auditor can avoid these bias traps. For the remainder of the course and subsequent assignments, continue to consider and utilizeyour understanding ofthese biases. ============================================== ACC 546Case 4.1 Enron Corporation & Andersen, LLP For more course tutorials visit www.tutorialrank.com

35. 1)What were the business risks Enron faced, and how did those risks increase the likelihood of material misstatement in Enron’s financial statements? 2) In your own words, summarize how Enron used SPE’s to hide large amounts of company debt (a) What are the responsibilities of a company’s board of directors? (b) Could the board of directors at Enron-especially the audit committee- have prevented the fall of Enron? (c) Should they have known about the risks and apparent lack of independence with the Enron’s SPEs? What should they have done about it? (a) Explain how ―rule-based‖ accounting standards differ from ―principle-based‖ standards. (b) How might fundamentally changing accounting standards from ―bright-line‖ rules to principle-based standards help prevent another Enron-like fiasco in the future?

36. (c) Some argue that the trend toward adoption of international accounting standards represents a move toward more ―principle-based‖ standards. Are there dangers in removing ―bright-line‖ rule? What difficulties might be associated with such a change? (a) What are the auditor independence issues surrounding the provision of external auditing services, internal auditing services, and management consulting services for the same client? (b) Develop arguments for why auditors should be allowed to perform these services for the same client. (c) Develop separate arguments for why auditors should not be allowed to perform non-audit services for their audit clients. What is your view, and why? (a) A perceived lack of integrity caused irreparable damage to both Andersen and Enron. How can you apply the principles learned in this case personally? (b) Generate an example of how involvement in unethical or illegal activities, or even the appearance of such involvement, might affect your career.

37. (c) What are the possible consequences when others question your integrity? What can you do to preserve your reputation throughout your career? 7) Enron and Andersen suffered severe consequences because of their perceived lack of integrity and damaged reputations. In fact, some people believe the fall of Enron occurred because of a form of ―run on the bank.‖ Some argue that Andersen experienced a similar ―run on the bank‖ as many top clients quickly dropped the firm in the wake of Enron’s collapse. Is the ―run on the bank‖ analogy valid for both firms? Why or why not? 8. Why do audit partners struggle with making tough accounting decisions that may be contrary to their client’s position on an issue? What changes should the profession make to eliminate these obstacles? 9. What has been done, and what more do you believe should be done to restore the public trust in the auditing profession and in the nation’s financial reporting system? ==============================================