Zzzz Best - 919 Words

Ernst amp; Whinney had an obligation to be independent, objective and with due care.Objectivity requires that an auditor should be skeptical and obtain independent evidence to verify information from the client. Ernst amp; Whinney failed to meet this obligation when they did not require corroboration of the insurance restoration contracts from independent third parties. When Ernst amp; Whinney resigned from the audit engagement,they had a professional obligation to disclose the reason for the withdrawal. Due care requires that an auditor discharges professional responsibilities with competence and diligence. It imposes the obligation to perform professional services to the best of the auditor’s ability with concern for the best†¦show more content†¦It imposes the obligation to perform professional services to the best of the auditor’s ability with concern for the best interest of the public. 1. I think that auditors should be held liable for failing to discover fraud. There are many ways the fraud could have been discovered over the years if the auditors performed an objective audit that followed rules and regulations. It is an auditor’s obligation to perform an audit with objectivity, skepticism, independence, and objectivity. Ernst amp; Whinney failed to meet these criteria. The auditors did not follow professional skepticism because when Minkow asked them to sign a confidentiality agreement to not follow up with any contractors, insurance companies, or building owners. This is not something to simply accept from Minkow. Ernst clearly did not perform a thorough audit and did not perform the necessary tests for reasonableness. 2. Ernst and Whinney should have seen a red flag from the start because there was an unreasonable growth in his company and he lived an extremely extravagant lifestyle. Minkow also had problems meeting his loan debt and there were many i nconsistencies in ZZZZ invoices. I think that the relationship between Ernst and ZZZZ did influence the risk assessment and the work done in the audit. Because Ernst did not want to lose ZZZZ as its biggest client, the work was not done objectively. There was a bias because Ernst wanted to keep the â€Å"wiz† of wallShow MoreRelatedZzzz Best987 Words   |  4 Pagesextending $ 7 million to ZZZZ Best Co. I agree with court’s decision because Ernst Whinney never issued an audit opinion on financial statements it was just a review report which was disclosed. However, I do not justify Ernst Whinney because the auditors besides from failure to notice ‘red flags’ had done few mistakes which lead to the law suit. The first mistake that the auditors made involved Mr. George Greenspan during the 1986 audit. This was the first audit since ZZZZ Best became a public companyRead MoreZzzz Best3065 Words   |  13 PagesCase 4-6 ZZZZ Best* The story of ZZZZ Best is one of greed and audaciousness. It is the story of a 15-year old boy from Reseda, California who was driven to be successful regardless of the costs. His name is Barry Minkow. Minkow had high hopes to make it big – to be a millionaire very early in life. He started a carpet cleaning business in the garage of his home. Minkow realized early on that he was not going to become a millionaire cleaning other people’s carpets. He had bigger plansRead MoreZzzz Best Case 1.9577 Words   |  3 Pages1. Ernst Whinney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for the three months ended July 31, 1986. How does a review differ from an audit, particularly in terms of assurance implied by the auditor’s report? A review and an audit report are both a form of an attestation engagement. A Review, however, is less in scope so it provides a moderate level of assurance on the financial statements. It is consideredRead MoreZZZZ Best Company: The Backlash Essay845 Words   |  4 PagesCase 1.9 ZZZZ Best Company, Inc, 1. Ernst amp; Whinney audit firm suffered tremendously from the backlash of ZZZZ Best’s case. One of the issues stemming from ZZZZ Best’s case is the difference between a review and an audit as evidence by civil suit filed by a California bank against the firm. The bank claimed that its decision to grant ZZZZ Best’s loan was based on the opinion of Ernst amp; Whinney review of ZZZZ Best’s financial statements period ending July 31, 1986. The case was ruled in favorRead MoreEssay on ZZZZ Best Case: Questions801 Words   |  4 PagesACG 4632 ZZZZ Best Case Questions (40 points) 1. Identify the primary audit objectives that auditors hope to accomplish by: * Confirming a client’s year-end accounts receivable, and (Balance related existence) * Performing year-end sales cutoff tests. (transaction-related objective timing) (5 points) 2. Ernst amp; Whinney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for the threeRead MoreAccounting Frauds: ZZZZ Best Company, Inc1022 Words   |  5 PagesZZZZ Best company is one of the biggest examples of Accounting Frauds. The founder of ZZZZ best was Barry Minkow. He was a very smart young entrepreneur when he started the company. He was involved in credit card forgeries prior to starting his own carpet cleaning business â€Å"ZZZZ Best Company†. Minkow began his business with small carpet cleaning jobs and he became a multimillionaire in a very short period of time. Minkow met a person named Tom Padgett at Los Angeles Health club. This was the beginningRead MoreZZZZ Best Company, Inc: An Analysis3666 Words   |  15 PagesZZZZ Best Company Inc. Introduction This paper explores the ZZZZ Best Company which was begun by a 16 year old individual who was able to pull the wool over the eyes of many customers, investors and auditors. This paper will define the difference between review and audit when it comes to financial reports, comments on the procedures provided with regard to the management assertion of occurrence, verification of payments for jobs and how they can lead auditors to improper conclusion, the purposeRead MoreZZZZ Best Case Study: Understanding Audit and Review1205 Words   |  5 Pagesresponses to inquiries by obtaining corroborating evidence through inspection, observation or any other audit procedure. It can point out significant matters of the financial statements but does not provide assurance of their accuracy. The issue with ZZZZ Best case is that the auditors review was not sufficient enough to review any misstatements on the financial statements. Ernst Whinney never questioned the internal control, reviewed contra ctual agreements or made comparison of the previous statementsRead MoreZZZZ Best Company Fraud: Case Study1772 Words   |  8 PagesZZZZ Best Company Fraud Case Study 1) At an early age, Barry Minkow was introduced to the carpet cleaning industry by his mother who worked part time as a telephone solicitor for a small carpet cleaning company. This insight of the industry allowed Minkow to understand that the carpet cleaning industry was one which had very few barriers to entry, no licensing requirements, and required only a small amount of capital to enter. Also, because of these few barriers to entry, the industry has historicallyRead MoreCase Analysis : Zzzz Best Company, Inc.1688 Words   |  7 Pages 1. Read Case 1.9, ZZZZ Best Company, Inc. in your text. Answer questions #1, 2, and 4 found at the end of the case. Question # 1 A review is like an audit yet is less in extension and just gives restricted affirmation with respect to the financial statements. This varies with an audit that gives sensible affirmation that no material mistakes or illicit acts are detected. The goal of an audit is to give a sensible freedom of expressed opinion the money related proclamations taken all in all. A