1. What are the key audit objectives for an audit client’s income tax expense and tax-related assets and liabilities? Identify one audit procedure that could be applied to address each audit objective you listed.

2. What was the most pervasive internal control weakness evident in this case? Defend your answer. Do you believe the internal control weakness you identified qualified as a “material weakness” in internal control? Why or why not? What implications did the internal control weakness you identified have for the Weatherford auditors?

3. Inadequate staffing was a major problem that influenced the performance of Ernst & Young’s Weatherford audits. Identify the profession’s quality control standards that relate most directly to the staffing of audits. What measures should have been taken by Craig Fronkiewicz to ensure that the Weatherford audits were properly staffed?

4. One member of the Ernst & Young audit team described James Hudgins as “difficult, intimidating ... and stubborn, particularly with respect to the tax positions he took on behalf of the company.” What measures can auditors take to cope effectively and properly with uncooperative client personnel?

5. During the 2009 audit, Sarah Adams “made clear” to Craig Fronkiewicz that she “distrusted” James Hudgins and “believed he was misrepresenting the company’s ETR and net income.” What should the Ernst & Young auditors have done at this point in the audit? Defend your answer.

6. The AICPA Code of Professional Conduct identifies six ethical principles. Which of those principles, if any, were apparently violated by one or more members of the Weatherford audit engagement teams? Explain.

7. James Hudgins, Darryl Kitay, Craig Fronkiewicz, and Sarah Adams neither admitted nor denied the charges of misconduct filed against them by the SEC. Do you believe the SEC should have sought admissions of guilt from these individuals? Why or why not?