Go to https://www.sec.gov/divisions/enforce/friactions.shtml and select a recent AAER to analyze. Please DO NOT select an AAER related to insider trading or bribery as you will have difficulty responding to Question 3 in such instances. Look for AAERs related to accounting firms and CPAs.Additionally, it is important that you select an AAER that you understand and can succinctly summarize the major details.

1.Briefly summarize the ethical issue underlying the AAER.

2.How do the facts described within this AAER align with the risk factors discussed in Chapter 4 of your textbook pertaining to inherent risk, control risk, or detection risk?

3.Discuss how auditors could have prevented the AAER from happening. (Note: If it is not directly clear how the external auditor may have prevented the AAER from happening, discuss the role the internal auditor may have been able to play in preventing the issue.)

4.How do you think this AAER may impact investor confidence in the capital markets? How do you foresee this action impacting other stakeholders? Please try to be specific.