Questions and Answers of Legal Research Analysis

Identify and discuss the “Best Audit Practices” the PCAOB has identified as a way to improve audit quality, and reduce audit deficiencies.
On January 30, 2018, General Electric (GE) announced that it was taking an after-tax charge of $6.2 billion in the December 31, 2017 financial statements and additional cash funding of $15 billion in
“We can’t recognize revenue immediately, Paul, since we agreed to buy similar software from DSS,” Sarah Young stated. “That’s ridiculous,” Paul Henley replied. “Get your head out
In the same survey, managers were asked how acceptable earnings management was within their company’s culture, with 1 = culturally unacceptable and 8 = culturally acceptable. The average response
Winners & Losers, Inc. (WLI) is a Nevada corporation with its principal place of business in Las Vegas. Its business model is to provide electronic sports betting in conjunction with a new law
In a recent survey of 122 public company managers with financial reporting experience, respondents were asked how morally right they believed earnings management to be. Managers responded on a scale
How do AI and machine learning systems differ from the existing data analytic auditing systems like IDEA? Include a discussion of the professions’ concerns surrounding the use of AI in auditing.
Ronnie Maloney, an audit partner for Forrester and Loomis, a registered public accounting firm in Boston, just received a meeting request from Jack McDuff, the chairman of the audit committee of
In what some are suggesting is the worst financial reporting fraud since Enron, Wirecard filed for bankruptcy in June of 2020 after admitting that €1.9 billion Euros ($2.1bn U.S.) on its balance
Travis McGee, a Senior Audit Manager for a Big Four Audit, Consulting, Tax and Data Analytics organization, has just spent the last year helping the firm rollout its new Artificial Intelligence
The modern day audit is evolving rapidly. Some fear that auditors will be replaced by artificial intelligence (AI). Is this a valid concern?
Richard Lange, CPA, is a sole practitioner. The largest audit client in his office is Echo Park Sportswear (EP Sports). EP Sports is a privately owned company in South Bend, Indiana with a 12-person
Assume you are a CPA and the CFO of a large public company. You have identified a red flag that financial impropriety may exist in the reported numbers. Would you report it to the external auditors?
Maines and Whalen state in their research paper on the reliability of accounting information: “Accrual estimates require judgment and discretion, which some firms under certain incentive
What is the purpose of using financial analysis to spot earnings management?
You just became the new external auditor of a large public company that carries freight throughout the world. You just began to audit the 2021 financial statements and have come across a transaction
When should financial statements be restated?
Meredith Merriweather, CPA is the CFO of Trego Bikes and Trikes (TBT), a manufacturer of Bicycles ranging from tricycles to high-end racing bikes. The company has good market penetration and has seen
Jeremy Strong, CPA was recently hired as the new CFO of Image ware Consolidated (IC), a small publicly owned company. This is Jeremy’s first job outside of public accounting, leaving Deloitte after
Distinguish between big R and little r restatements. What is required of management and the external auditors when such events occur?
According to Linda Thornton, ethical leadership failures can be caused by different types of problems that may worsen. Some of these problems are caused by individuals and others may be embedded in
Explain how errors in accounting and reporting can trigger restatements.
The Kraft Heinz Co. case was discussed in the chapter. To refresh your memory, on May 6, 2019, Kraft Heinz disclosed that it would restate its financial statements due to faulty procurement
Explain how restatements due to operational issues can trigger restatements.
Rule 10b-5 is a regulation created under the Securities and Exchange Act of 1934 that targets securities fraud. Explain how the provision is applied in determining whether fraud has occurred
From the first quarter of 2018 through the third quarter of 2021, Accelerator, Inc., engaged in a wide-ranging fraud designed to artificially inflate the company’s reported revenue. This fraud
It has been said that “Businesses don’t fail—Leaders do.” Explain what this means.
Why do bad things sometimes happen to good people? Does this mean they are a bad person?
Why are Equity, Diversity, and Inclusivity considered to be important for businesses today?
What motivates a parent to bribe key people to get their kid admitted to a prestigious university? That is the ethical question of “Operation Varsity Blues.”In March 2019, the story broke of an
Ed Giles and Susan Regas have never been happier than during the past four months since they have been seeing each other. Giles is a 35-year-old CPA and a partner in the medium-sized accounting firm
For years, the Baseball Hall of Fame has officially steered clear of the question as to how voters should handle the candidacies of players connected to performance-enhancing drugs. Initially, two of
Jose and Emily work as auditors for the state of Texas. They have been assigned to the audit of the Lone Star School District. There have been some problems with audit documentation for the travel
Sam and John have been friends for 20 years. They met in college and worked together for 10 of the 20 years. During that time, each made a promise that if they won a lottery they would share the
According to the website Indeed, one question to ask the interviewer when you are interviewing for a job is: “What are the characteristics of someone who would succeed in this role?” Why might
Some people believe that promise keeping is the essence of ethical behavior. Do you agree?
Section 179 of the IRS tax code allows qualifying businesses to deduct the full cost of “eligible property” on their income taxes as an expense, rather than requiring the cost of the property to
What does the term “civility” mean to you? Do you think it is civil behavior to shout down a speaker with whom you do not agree? What about cancelling someone because you don’t agree with their
Jenna was irritated after class today. A classmate, Ben, had argued about the need for social justice reform that included defunding the police. Jenna was offended by the comments in part because her
MacIntyre, in his account of Aristotelian virtue, states that integrity is the one trait of character that encompasses all the others. How does this relate to the Principles in the AICPA Code of
Do you think the “Resolution of Ethical Issues” section in The IMA Statement of Ethical Professional Practice is a helpful part of its ethical standards?
One morning a student telephones her professor that she won’t be able to take a scheduled exam because her car broke down on the way home from an out-of-town trip. She asks to take it at another
Consider the ethical principle of praising the good and ignoring the bad. Is this a good way to foster ethical behavior?
Gregory and Alex started a small business based on a secret-recipe salad dressing that got rave reviews. Gregory runs the business end and makes all final operational decisions. Alex runs the
Hailey Declaire, a CPA, just sent the tax return that she prepared for a client in the marijuana growing and distribution business, Weeds ‘R’ Us, to Harry Smokes the manager of the tax
Milton Manufacturing Company produces a variety of textiles for distribution to wholesale manufacturers of clothing products. The company’s primary operations are located in Long Island City, New
Leaving home for the first time and going off to college is an exciting and stressful time for tens of thousands of students across the United States each year. Leaving the familiarity of family,
Sherron Watkins regrets not taking more action back in 1996 when she first concluded that Enron’s accounting might not be in accordance with GAAP. Explain how GVV training might have helped her
How do the reasons and rationalizations of GVV influence the culture of the organization?

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