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Unformatted text preview: 3-45 (Conflict of Interest) In The Fund of Funds, Ltd. v.Arthur Andersen & Co.,Arthur Andersen auditors completed the audit of Fund of Funds with no problems encountered and issued an unqualified opinion. Shortly thereafter, essentially the same audit team began the audit of King Resources. While conducting that audit, the auditors realized that there was a significant contract between King Resources and Fund of Funds. The auditors continued with the audit and were surprised to find that King Resources had not dealt fairly with Fund of Funds by selling them property that was significantly overpriced. Now the auditors were caught in a dilemma: they could tell Fund of Funds. Alternatively, they could refrain from telling Fund of Funds and hope that Fund of Funds would never find out.Requireda. Discuss what course of action you would recommend the auditors should take and potential results of that action.b. How could this situation have been avoided?7-41 (High Risk Audit Area: Revenue Recognition) The SEC has stated that revenue recognition should always be considered to be high risk in planning an audit of a company's financial statements.to be high risk in planning an audit of a company's financial statements....
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This note was uploaded on 11/05/2011 for the course ACCOUNTING 101 taught by Professor Online during the Spring '11 term at Colorado Technical University.
- Spring '11