2. Identify the fraud risk factors posed by DHB for its independent auditors. Which of these factors, in your opinion, should have been of primary concern to those auditors?

3. During the 2004 DHB audit, the companys independent auditors had considerable difficulty obtaining reliable audit evidence regarding the $7 million of obsolete vest components that allegedly had been destroyed by a hurricane. What responsibility do auditors have when the client cannot provide the evidence they need to complete one or more audit tests or procedures?

4. What responsibility, if any, do auditors have to search for related-party transactions? If auditors discover that a client has engaged in related-party transactions, what audit procedures should be applied to them?

5. Compare and contrast the internal control reporting responsibilities of the management and independent auditors of public companies.

6. What potential consequences do frequent changes in auditors have for the quality of a given entitys independent audits? Identify professional standards or other rules and regulations that are intended to discourage auditor changes or provide disclosure of the circumstances surround them.

7. David Brooks apparently made threatening remarks to certain of his companys independent auditors. What actions should auditors take when they are the target of hostile statements or actions by client executives or employees?

8. Does the SEC have a responsibility to protect the investing public from self-interested corporate executives? Do professional auditing standards or other rules or regulations impose such a responsibility on independent auditors?

9. The audit committee of DHB Industries was criticized for failing to carry out its oversight responsibilities. What are the primary responsibilities of a public companys audit committee?