Question
How can I explain quality control about the 1.7 Navistar case? Can you please explain? Some of the things are list below. Thank you so
How can I explain quality control about the 1.7 Navistar case? Can you please explain? Some of the things are list below. Thank you so much!
1. The engagement reviews provide cause for concern that the Firm's system of quality
control may not do enough to assure that the Firm performs appropriate procedures to
audit signi!cant accounting estimates, including evaluating management's assumptions
and testing the data supporting the estimates.
2. The engagement reviews provide cause for concern about the effectiveness of the Firm's
quality controls with respect to the audit procedures performed on income tax balances.
3. The engagement reviews provide cause for concern about the effectiveness of the Firm's
quality controls with respect to the use of specialists.
4. The inspection results provide cause for concern that the Firm's system of quality control
may not do enough to assure that accounting and auditing issues are evaluated with the
objectivity that is contemplated in the auditing standards.
5. The Firm's apparent failure to appropriately challenge management's representations
occurred in numerous areas, including when the Firm evaluated management's estimates,
considered the valuation of investment securities, performed alternative procedures in
connection with con!rmations, and tested income tax accounts and disclosures.
6. The engagement reviews provide cause for concern that the Firm's quality controls may
not result in appropriate and effective consultations when necessary. Further, the Firm's
policy on consultations ... appears to be de!cient in that it lacks a mechanism reasonably
designed to provide that signi!cant, complex matters are raised to the appropriate level in
the hierarchy in order to ensure a suf!cient level of rigor in the analysis.
7. Deloitte Touche Tohmatsu (DTT) uses its global internal inspection program to assess and
monitor the quality of the audit work of its member !rms. However, the speci!c results
of the inspections of member !rms or practice of!ces are not disseminated to the Firm's
partners. . . . Accordingly, the global inspection program does not routinely provide a
U.S. engagement partner with a basis for assessing a foreign of!ce's quali!cations and
familiarity with U.S. GAAP, PCAOB standards, and SEC reporting requirements.
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