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I have 2 problems from my homework.

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CASE 2-4 MULTIPLE COUNTRY ENFORCEMENT* SEC Charges Royal Ahold and Three Former Top Executives with Fraud; Former Audit Committee Member Charged with Causing Violations of the Securities Laws for Immediate Release 2004-144 Washington, D.C., Oct. 13, 2004The Securities and Exchange Commission today announced the filing of enforcement actions alleging fraud and other violations against Royal Ahold (Koninklijke Ahold N.V.) (Ahold) and three former top executives: Cees van der Hoeven, former CEO and chairman of executive board; A. Michiel Meurs, former CFO and executive board member; and Jan Andreae, former executive vice president and executive board member. The Commission also charged Roland Fahlin, former member of Ahold's supervisory board and audit committee, with causing violations of the reporting, books and records, and internal controls provisions of the securities laws. The SEC's complaints, filed in the United States District Court for the District of Columbia, allege that, as a result of the fraudulent inflation of promotional allowances at U.S. Foodservice, Ahold's wholly-owned subsidiary, the improper consolidation of joint ventures through fraudulent side letters, and other accounting errors and irregularities, Ahold's original SEC filings for at least fiscal years 2000 through 2002 were materially false and misleading. For fiscal years 2000 through 2002, Ahold overstated net sales by approximately EUR 33 billion ($30 billion). For fiscal years 2000 and 2001 and the first three quarters of 2002, Ahold overstated operating income by approximately EUR 3.6 billion ($3.3 billion) and net income by approximately EUR 900 million ($829 million). The Commission has not sought penalties in the enforcement actions against the individuals because the Dutch Public Prosecutor's Office, which is conducting a parallel criminal *Dr. Thomas Klein, Emeritus, the University of Toledo, assisted with this case. Source: U.S. Securities and Exchange investigation in The Netherlands, has requested that the Commission not seek penalties against the individuals because of potential double jeopardy issues under Dutch law. Because of the importance of this case in The Netherlands and the need for continued cooperation between the SEC and regulatory authorities in other countries, the Commission has agreed to the Dutch prosecutor's request. Required a. Why can the SEC charge a company in The Netherlands with U.S. security violations? b. Why is The Netherlands conducting a parallel criminal investigation? c. Speculate on how many countries may be running a parallel criminal investigation relating to securities sold. CASE 2-5 MATERIALITY: IN PRACTICE Professional standards require auditors to make a preliminary judgment about materiality levels during the planning of an audit. Statement of Auditing Standards (SAS) No. 47 states that \"the auditor plans the audit to obtain reasonable assurance of detecting misstatements that he/she believes could be large enough, individually or in the aggregate, to be quantitatively material to the financial statements.\"* SAS No. 47 indicates that materiality judgments involve both quantitative and qualitative considerations. This statement recognizes that it ordinarily is not practical to design procedures to detect misstatements that could be qualitatively material. A number of rule-of-thumb materiality calculations have emerged, such as percentages of income, total assets, revenues, and equity. These rule-of-thumb calculations result in differing amounts for audit planning purposes. In fact, sizeable differences can result, depending on the rule of thumb and the industry. Required a. It would seem prudent for auditors to give careful consideration to planning materiality decisions. Comment. b. It is difficult to design procedures to detect misstatements that could be qualitatively material. Comment. c. It is difficult to design procedures to detect misstatements that could be quantitatively material. Comment. d. In your opinion, would the application of materiality be a frequent issue in court cases in e. Comment on materiality implications of the Sarbanes-Oxley Act as it relates to control weaknesses. *This case is based on SAS No. 47 as updated and presented in AV312 of the Codification of Statements on Auditing Standards (American Institute of Certified Public Accountants, January 1989). Source: American Institute of Certified Public Accountants, Jan. 1989 volving financial statements? Comment