Two former Kmart executives were indicted by a Detroit grand jury on federal charges of fraud, conspiracy and making false statements over their recording of a $42 million payment that resulted in an overstatement of Kmart's results.

The questions:

1. Company background :

a. History (when/where/how they were founded, major past events, etc.)

b. Major lines of business/industries and products

c. Any other relevant or interesting facts about the company

2. Scandal content:

a. Who was responsible for the fraud? What were their motives for committing it?

b. What actually took place? What were the specific financial statement consequences (what accounts were overstated or understated; what were the fraudulent debits and credits and what should they have been)?

c. How was the fraud discovered?

d. What were the consequences to those involved (the company, shareholders, and perpetrators themselves)?

3. Auditor involvement:

a. Were the auditors negligent or complicit (or neither) in the scandal?

b. What could the auditors have done differently or better to detect or prevent the scandal? For example, were there red flags missed or substantive procedures poorly executed?

c. What lessons can we learn as auditors?