AC410 Unit 2 Assignment
3–31. Ron Barber, CPA, is auditing the financial statements of DGF, Inc., a publicly held company. During the course of the audit, Barber discovered that DGF has been making illegal bribes to foreign government officials to obtain business, and he reported the matter to senior management and the board of directors of DGF.
a. If management and the board of directors take appropriate remedial action, should Barber be required to report the matter outside the company?
b. Describe Barber’s appropriate response if management and the board of directors fail to take appropriate remedial action.
3–43. Thomas Gilbert and Susan Bradley
4–21. Jensen, Inc., filed suit against a public accounting firm, alleging that the auditors’ negligence was responsible for failure to disclose a large defalcation that had been in process for several years. The public accounting firm responded that it may have been negligent, but that Jensen,Inc., was really to blame because it had completely ignored the public accounting firm’s repeated recommendations for improvements in internal control. If the public accounting firm was negligent, is it responsible for the loss sustained by the client? Does the failure by Jensen, Inc., to follow the auditors’ recommendation for better internal control have any bearing on the question of liability? Explain.
4–26. The international CPA firm of Arthur Andersen faced significant liability in conjunction with its audits of Enron Corporation.