Question
Case- I joined a Big Four accounting firm straight out of college a few years ago as a staff accountant. My first assignment on an
Case- I joined a Big Four accounting firm straight out of college a few years ago as a staff accountant. My first assignment on an audit engagement was a learning experience I would never forget; it was a practical lesson perhaps even more valuable than my newly minted accounting degree. On our way to the client, Susan, a senior accountant and one of my new colleagues, cautioned me about the CFO: He has a bit of a reputation, she said, adding, Let me know if you have problems. And dont let him browbeat you! That comment, as an introduction to my brand-new career, was just a little unsettling. I was given what seemed to be a nice, safe task: testing routine journal entries, which involved selecting items from the population and examining the supporting evidence. I asked a clerk for some reconciliations and a little later, to my surprise, I got a call from the CFO himself to ask why we were working on trivial items, as he called it. We hired you for the big picture, not this kind of stuff, was his terse comment, and he hung up before I could respond. We were under a tight deadline to get the audit completed, and after several days there was no sign of the reconciliations Id requested. I talked to Susan and later Mike, the engagement partner. When I finally received the reconciliations and tested them, I noticed a high volume of journal entries that even to my inexperienced eyes seemed a little out of the ordinary.
--Identify the key red flags in the case that heighten your professional skepticism, and explain why you believe them to be red flags?
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