equirement 12 (a) Management override of controls presents a significant audit risk. Provide some examples of procedures that auditors must perform to address the risk of management fraud related to overrides of controls. Provide some examples of where management override of controls occurred in Diamond's fraud. fold in in Taloitte's andit fane Diamond Foods, Inc.: A Comprehensive Case in Financial Auditing Mahendra R. Gujarathi Bentley University Indian Institute of Management, Ahmedabad ABSTRACT: Diamond Foods is a comprehensive case that provides an opportunity for students to apply several financial auditing concepts and professional auditing standards to a real-world context. Diamond overstated its earnings of fiscal 2010 and 2011, by 38 percent and 47 percent, respectively, by delaying recognition of the cost of walnuts acquired to later accounting periods. The case requires students to determine whether Diamond's external auditor-Deloitte & Touche, LLP (Deloitte)-fulfilled Its responsibility to obtain reasonable assurance that the financial statements were free of material misstatement. Students need to determine whether Deloitte's issuance of an unqualified opinion on Diamond's financial statements and Internal controls violated professional auditing standards. In addition, students are required to evaluate whether Deloitte obtained sufficient understanding of Diamond's business and industry, exercised the needed professional skepticism, and used appropriate analytical procedures to discharge its professional responsibilities. The case presents an opportunity to achieve several learning objectives, including the development of research, critical-thinking, communication, and problem-solving skills. The case is appropriate for use in a graduate or undergraduate course in financial auditing. It can also be used in a fraud examination course, or in a capstone course in the accounting curriculum. Keywords: professional skepticism; analytical procedures; auditing standards; auditor liability; Deloitte; fraud detection; Diamond Foods. CASE Auditors must approach their jobs with independence and skepticism. How do we instill those necessary traits in t auditors? This may be the most important auditing question of our time. James Doty, PCAOB Chairman Remarks made at SEC Reporting Conference, June 2, 2011 Understanding financial relationships is essential in planning and evaluating the results of analytical procedures, and generally requires knowledge of the client and the industry or industries in which the client operates. -American Institute of Certified Public Accountants, AU 329 The Company iamond Foods, Inc. (hereafter, Diamond or the Company) is an innovative premium snack food and culinary nut company that focused on several brands, including Kettle Brand Chips, Emerald snack nuts, Pop Secret popcom