next card inc. case questions
Next Card Inc. Case Questions 1. Identify and briefly describe the specific fraud risk factors present during the 2000 NextCard audit. The fraud risk that is present in the NextCard Inc. article would be fraudulent financial reporting. The company hid their statements from the public and falsified their financial position. Also, the auditors were going back to prior year statements to report them for the current year. They went back into the system to archive the reports and made it seem like they did not 2. Based on the factors you noted in Question #1, how should auditors respond with their planning and procedures performed during the engagement? The auditors, instead of covering the trail of fraud, should have acted in an ethical manner to resolve the issue, 1 3. The key auditing fieldwork standards are 1) Adequate planning and proper supervision, 2) Sufficient understanding of the entity, its environment, and its internal control, and 3) Sufficient appropriate evidence. For each standard name 1 thing E&Y auditors needed to do better? (For example, they could have gained a further understanding of the industry during their planning phase) 4. When Oliver became a member of the NextCard engagement team he hoped that Thomas Traurs would serve as his mentor. What responsibility, if any, do senior audit personnel have to serve as mentors for their subordinates? Senior mentors have the responsibility of showing their assigned newcomers of what to do during engagements and also being there for them if they have any questions. Trust Flanagan's mentor, asked him to gather the 2000 work papers and have them ready for the 2001 revision. Traure was not being a good mentor towards Flanagan Next Card Inc. Case Questions 1. Identify and briefly describe the specific fraud risk factors present during the 2000 NextCard audit. The fraud risk that is present in the NextCard Inc. article would be fraudulent financial reporting. The company hid their statements from the public and falsified their financial position. Also, the auditors were going back to prior year statements to report them for the current year. They went back into the system to archive the reports and made it seem like they did not 2. Based on the factors you noted in Question #1, how should auditors respond with their planning and procedures performed during the engagement? The auditors, instead of covering the trail of fraud, should have acted in an ethical manner to resolve the issue, 1 3. The key auditing fieldwork standards are 1) Adequate planning and proper supervision, 2) Sufficient understanding of the entity, its environment, and its internal control, and 3) Sufficient appropriate evidence. For each standard name 1 thing E&Y auditors needed to do better? (For example, they could have gained a further understanding of the industry during their planning phase) 4. When Oliver became a member of the NextCard engagement team he hoped that Thomas Traurs would serve as his mentor. What responsibility, if any, do senior audit personnel have to serve as mentors for their subordinates? Senior mentors have the responsibility of showing their assigned newcomers of what to do during engagements and also being there for them if they have any questions. Trust Flanagan's mentor, asked him to gather the 2000 work papers and have them ready for the 2001 revision. Traure was not being a good mentor towards Flanagan
