Auditors Independence Case Study - 14460 Words

Academy of Management Review 2006, Vol. 31, No. 1, 10–29. CONFLICTS OF INTEREST AND THE CASE OF AUDITOR INDEPENDENCE: MORAL SEDUCTION AND STRATEGIC ISSUE CYCLING DON A. MOORE Carnegie Mellon University PHILIP E. TETLOCK University of California, Berkeley LLOYD TANLU MAX H. BAZERMAN Harvard University A series of financial scandals revealed a key weakness in the American business model: the failure of the U.S. auditing system to deliver true independence. We offer a two-tiered analysis of what went wrong. At the more micro tier, we advance moral seduction theory, explaining why professionals are often unaware of how morally compromised they have become by conflicts of interest. At the more macro tier, we offer issue-cycle theory,†¦show more content†¦Special interest groups preselect and even fund â€Å"independent† research to be made public at political gatherings and public conferences. Lobbyists seeking favorable legislation bend politicians’ ears, and corporations fill their campaign coffers.1 One could take the optimistic position that these conflicts of interest in the American corporate, medical, and political realm are for the most part innocuous, or that they often work to the clients’ benefit. After all, those most likely to have vested int erests are also those most likely to possess the most relevant expertise in a given field (Stark, 2005). For example, many both inside and outside the accounting industry have argued that an auditing firm is better equipped to handle a client’s complex accounting tasks when the auditor also has deep consulting ties to that client. Similarly, a stock analyst might argue, â€Å"I would not recommend buying a stock that I myself did not own,† and proponents of stock options might assert that giving managers stock options in their company ensures that these employees are financially tied to the fate of their firms. In addition, some experts believe that conflicts of interest are innocuous because, Of course, conflicts of interest are not unique to the United States. The successShow MoreRelatedA Critical View of the Audit Expectation Gap and Audit Rotation1828 Words   |  7 Pages(Porter, 1993). This lack of understanding is called expectation gap where the outcomes of the audit expected and its actual purpose varies. One solution to this fundamental issue is to reduce this expectation gap by providing a clear definition of auditors role and also the audit function that is required to be performed by him. However, during this defining phase, it is necessary to consider whether an audit rotation would reduce this audit expectation gap. This term, Audit Expectation Gap wasRead MoreAudit Committee Annual Evaluation of the External Auditor3135 Words   |  13 PagesAUDITOR’S INDEPENDENCE AND ACCOUNTABILITY IN NIGERIA PUBLIC ENTERPRISE This study seeks to identify the determinants of auditors’ independence in public enterprises and determine the policy implications of lack of auditors’ independence in the public sector. The data for the research was primary and collected via questionnaire from the Nigerian Ports Authority Headquarters Lagos. The questionnaire responses were analyzed using the percentage method. The hypothesis was tested usingRead MoreENRON Case Study1572 Words   |  7 Pagesthat crisis. Briefly justify each of your choices. Following parties are believed to be the most responsible for the crisis. With any big organization going so bad, the blame starts with the top level executives, there was no different in this case. For Enron the blame started with Enron’s executives, Kenneth Lay, Jeffrey Skilling, and Andrew Fastow. Their goal was to make Enron into the world’s greatest company. To make this goal a reality, they created a company culture that encouraged â€Å"ruleRead MoreWhy Is It Important for External Auditors to Be Independent? Relate Your Answer to the Primary Role of External Auditors. Give Examples of Specific Ways the Lack of Auditor Independence May Impact Adversely on an Audit.1648 Words   |  7 Pageslack of auditor independence may impact adversely on an audit. In 2001, there was an event that had shaken the whole business world. The crash of Enron in US, followed by worldwide collapse of its auditor, Arthur Andersen. It was a greatest corporate failure uncovered in business history. Follow the Enron-Andersen scandal, massive organizations like WorldCom, Xerox and Waste Management confront a similar fate. The debate rested on the issue of audit independence , that is found toRead MoreWhy Is It Important for External Auditors to Be Independent? Relate Your Answer to the Primary Role of External Auditors. Give Examples of Specific Ways the Lack of Auditor Independence May Impact Adversely on an Audit.1638 Words   |  7 Pagesauditor independence may impact adversely on an audit. In 2001, there was an event that had shaken the whole business world. The crash of Enron in US, followed by worldwide collapse of its auditor, Arthur Andersen. It was a greatest corporate failure uncovered in business history. Follow the Enron-Andersen scandal, massive organizations like WorldCom, Xerox and Waste Management confront a similar fate. The debate rested on the issue of audit independence , that isRead MoreEssay on ZZZZ Best Company, Inc.: Case Study1340 Words   |  6 Pages------------------------------------------------- Case Study 2 ------------------------------------------------- Due Date: March 30,2010 ZZZ Best, Case 1. 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 three months ended July 31, 1986. How does a review differ from an audit, particularly in terms of the level of assurance implied by the auditor’s report? There are numerous differencesRead MoreSarbanes Oxley Act # 11 Titles971 Words   |  4 PagesSarbanes-Oxley Act contains 11 titles, they provide specific guidelines and regulations for financial reporting. The titles are: Public Company Accounting Oversight Board (PCAOB), Auditor Independence, Corporate Responsibility, Enhanced Financial Disclosures, Analyst Conflict of Interest, Commission Resources and Authority, Studies and Reports, Corporate and Criminal Fraud Accountability, White Collar Crime Penalty Enhancement, Corporate Tax Returns and Corporate Fraud Accountability. In the introduction ofRead MoreAuditor Independence Is Defined By Mautz And Sharaf1905 Words   |  8 PagesAuditor independence is defined by Mautz and Sharaf (1961) as the formation of judgement, concluded through the state of an unbiased mind. Through demonstrated objectivity and truthfulness can auditors give a true and fair view about management’s financial statements. Due to the nature of the aud iting profession whereby services provided extend beyond concluding a true and fair view, coupled with the lack of a vital source of power results in auditors being unable to be truly autonomous. The purposeRead MoreAuditors Independence12377 Words   |  50 PagesOn Auditor’s Independence: A Study on ACNABIN, Chartered Accountants Auditor’s Independence A Study on ACNABIN-Chartered Accountants Firm Table of Content CHAPTERS PARTICULARS PAGES Chapter -1 Introduction 1.1 Introduction 1.2 Background 1.3 Scope of the Study 1.4 Objectives of the Study 1.5 Methodology of the Study 1.6 Limitation of the Study Chapter-2 Literature Review 2.1 DEFINITION OF AUDIT 2.2 Understanding Independence 2.3Read MoreWeek 8 Auditing II Essay1076 Words   |  5 Pagesï » ¿Chapter 7 Case – 7-54 Going Concern  Please respond to the following: From the e-Activity, analyze the auditor’s responsibility to determine if a company can continue as a going concern. From your analysis, propose at least two (2) key factors that the auditor should consider when determining an entity’s ability to continue as a going concern. Provide a rationale to support your proposal. SAS 59, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern (AICPA, Professional

The Effects Of Stress On Being A Schoolteacher - 1422 Words

Introduction In this essay, I will be looking at the research on the stress involved in being a schoolteacher. Teaching in schools is now widely recognised as being one of the ‘high stress’ occupations, and we need to understand the causes of stress for teachers and how it can be reduced (Dollard et al., 2003; Kyriacou, 2000). The term ‘stress’ in the context of the occupational setting of teaching has been conceptualised in three main ways by researchers (Cole and Walker, 1989; Dunham and Varma, 1998). Some have used the term to describe the level of pressure and demands placed on the teacher. Some have used the term to refer to the teacher’s emotional and behavioural responses to such demands. Most writers define stress as†¦show more content†¦Burnout is often displayed as a lack of interest and enthusiasm for the work, a sense of being detached and withdrawn at work, and by displaying a cynical attitude towards new initiatives and towards colleagues. Measuring teacher stress Early research on teacher stress was bedevilled with problems of measurement. Not surprisingly, research on teacher stress has been dominated by the use of questionnaires. However, self-report measures of teacher stress have many short-comings. Firstly, one teacher’s use of the term stress may differ from another’s – one teacher might say they experienced stress whenever they felt annoyed, whilst another would reserve this term only for when they felt they were on the verge of exploding with anger. Secondly, self-report is subject to context – some teachers might it easier to report stress in one context (e.g. getting all the marking done in time) than in another (e.g. dealing with class control problems). The third problem, is how to take account of the distinction between the frequency of an event occurring and the intensity of the stress such an event invokes: is it sensible to say that a frequently occurring but low intensity source of stress (e.g. pu pils arriving late for a lesson might be very frequent but only causes low level stress) equates to a fairly rare but very intense event (a pupil throwing an object at the teacher in the classroom)? Some researchers have developed more precise

Corporate Law Securities and Investment

Question: Discuss about the Corporate Law for Securities and Investment. Answer: Introduction: The present case had been commenced as civil proceedings in the Supreme Court of New South Wales by the Commission of Australian Securities and Investment against James Hardie Industries Limited. The case was commenced in context to false and misleading preparation and presentation of public statements and breached the regulations of section 180(1) under Corporations Act. It was found that the case involved James Hardie Industries NV along with the seven directors, former non- executive and three former executives of James Hardie Industries Limited. The decision of the case presented the significance on the role of directors including executive and non- executive directors, along with the senior executive management of the organization. Further, the case also highlighted the appropriate implementation of legal regulations for considering the strategic matters, issues on corporate governance and other business decisions. Background of the case: James Hardie Industries Limited was holding/ parent company of the organizational group James Hardie that was engaged in the manufacturing and trading business of asbestos till the year 1937. Until the year 1987, the James Hardie group including its two subsidiary companies engaged in the business of same products. Later, in the year 2001, early February, the board members of the organization formed a foundation named Medical Research and Compensation in order to manage and satisfy the claim for asbestos products. Accordingly, the organizational executives prepared a draft ASX announcement for the purpose of public release which was approved by the board of directors. Another event occurred during the same time was formation of covenant and indemnity deed between the company and Coy Jsekarb to indemnify the organization from the liabilities against the trading of products. As per the release of ASX draft by the James Hardie Group, the total assets of the foundation was valued and stated to $293 million. It was mentioned that the said amount would be enough to meet the required funds for compensatory claims for the injury on using the asbestos products. In view of the press conference, it was noted that the organizations CEO, Mr. Macdonald, presented statements on the Foundations sufficient funds. Moreover, it was found that The Deed was not presented and revealed in any announcement made by ASX. Further, it was observed that the group of James Hardie was restricted after the formation of the Foundation, in terms of new parent company and incorporated in the Netherlands. During the year 2002, the CEO of the enterprise, Mr. Macdonald provided presentation across several regions stating the statement on sufficient funds in the Foundation with respect to the holding company, James Hardie Group. Accordingly, the Commission of Australian Securities and Investment initiated civil proceedings against the organizations (JHIL and JHNIV) for presenting false and misleading statement. The commission contended that the organizations provided false statements with respect to the securities leading to deceptive conduct and breach of continuous disclosures in compliance with the principles of Corporations Act. Apart from the organization, the proceeding was also commenced against the non- executive directors, CEO of the organization as well as the General Counsel along with the organizational CFO. Legal Issues The following case involves civil proceedings with respect to the supervision and regulation of the relevant principles of Corporations Act. The case incorporates whether the announcement made for the Foundation statement was approved at the meeting of the directors and whether the minute was prepared in compliance with the principles under section 251A and 1305 of the Corporations Act. It had been observed that the statement issued by the organizational directors contained fraud and misleading information to the investors and other stakeholders of the company. It is required to be determined that whether the directors of the company including senior executives breached the regulations of section 180(1) of the Corporations Act. Further, the present case requires to determine whether the principles of section 995(2) of the Corporations Act had been complied while making the announcement for the release of statement to ASX. Since the released statement contained the information on exis ting funds with the Foundation, it is essential to disclose the true and fair value of assets and funds for the benefit of stakeholders, investors and public. Accordingly, the final release of the statements requires to be approved by the directors as well as it is important to check the compliance of legal regulations for correct and fair disclosure of value of assets. Therefore, it is required to be analyzed whether the company followed the principles of section 995(2) and 999 along with the regulations of section 180(1), 181 under Corporations Act. It is to be determined whether the directors failed to comply the regulations of Corporations Act section 180(1) with respect to the approval of draft statement and public announcement made through ASX. Apart from the company and directors, the case includes analysis on compliance of Corporation Act regulations in part of CEO and general counsel with respect to the draft Information Memorandum to be used for the arrangement of members scheme. Additionally, regulations of section 1041 under Corporation Act along with the analysis of Listing Regulations 3.1 for the purpose of restructuring disclosures. Legal Principles According to section 251A under Corporations Act, the organization is required to prepare and maintain the minute book within the period of one month to record the resolutions and proceedings of the meetings. It is also important to record the proceedings of meeting of directors as well as other resolutions passed by the company directors or members. Further, section 1305 of the Corporations Act requires a company to maintain the corporate books for the purpose of admissible in evidence for proceedings or any other legal matters (Austlii.edu.au 2016). As per section 180 of the Corporations Act on care and diligence to be performed by the directors and executives, it is significant to exercise the duties for business activities by maintain reasonable care and diligence. The directors and executive officers are required to discharge the requisite duties with proper care so that the business decisions and activities reflects true and fair results for the stakeholders and public (Madsen and Rodgers 2015). For the purpose of any business decisions, directors and executives are responsible to make judgment based on good faith and it should not include any personal interest material to the company. Apart from that, section 180 provides that the directors and executives should inform themselves including the company for the purpose of appropriate and fair business decisions. It is important to conduct business activities as well as business decisions in the best interests of the organization as well he stakeholders (Crane, Graham and Himick 2015). Moreover, section 180(1) along with the sub- section (2) should be operated in compliance to the regulations of common law with respect to the directors duties. Further, section 995 as well as section 999 of the Corporation Act states the regulations on misleading or deceptive conduct for preparing and presenting the statements for dealing in securities. It states that any person, director or executive of the organization should not be involved in relation to the deal of securities for allotment, issue or for the purpose of publishing the related statements (Austlii.edu.au 2016). Moreover, it is stated that the contravention of section 995 would be considered if the statement of securities value or any other relevant information if it contains deceptive or misleading information. Accordingly, section 181 of the Corporation Act requires the organizational directors to present the business documents and statements in true and fair view as well as in good faith for the benefit of investors and other stakeholders of the company. If the any director or executive officer contravenes the principles of section 181, then the offender would be liable under civil penalty as per the limitations mentioned under section 1317E. Accordingly, section 1041 provides that the person engaged with the organization should not be involved in any transactions whether directly or indirectly to create artificial trading price (Austlii.edu.au 2016). Decision Considering the legal regulations and principles of relevant to the circumstances laid in the present case, the court contended that the directors and other organizational executives failed to comply the requirements of Corporation Act. It was found that the secretary, general counsel and other directors of JHIL breached the principles of section 180(1) since the concerned executives failed to ensure the accountability and fairness of the ASX announcement. As the statement mentioned the information on sufficient funds for paying off the compensation, it is significant to present the same with transparency and accountability. The responsibility of presenting the true and fair statement lies on the CEO, CFO, secretary as well as general counsel of the company ensuring the compliance of required provisions of Corporations Act. With respect to the indemnity deed, it was contended by the court that the organizational CEO and General Counsel did not comply the provisions of 180(1) for providing approval to release the deed with misleading information. Accordingly, in case of ASX announcement, the court found that the CEO of the company breached the principles under sections 999 and 995 of Corporations Act since the announcement contained misleading information. In order to present any statement for providing information to the public it is essential to provide correct and appropriate information, which was not presented by the senior executives of JHINV. Since the principles of sections 999 requires the company and concerned senior executives to present the appropriate announcement or public statements, it is essential to provide ASX announcement in compliance with the provisions (Trautman, Triche and Wetherbe 2013). The court found that the CEO of the company Mr. Macdonald did not comply the provisions of se ction 1041 subsection (E) and (H) for involvement in ant transactions. As per the regulations of section 1041(E) and 1041(H), any concerned executive of the organizations should not be involved in the business transactions or any financial products or services. According to the relevant provisions, financial products or service includes dealing or issue of services that involves offer price for securities, bidding or any other pricing recommendations (Augustin, Brenner and Subrahmanyam 2015). In case the requirements of section 1041(E) and 1041(H) are contravened then the offender would be assessed for civil liability under section 1041I, division 4. As per the analysis of the court, it had been found that the senior executives of the company including directors and CEO, regulations of section 1041 of the Companies Act had been contravened (Austlii.edu.au 2016). As a result, the concerned executives would be held liable under civil proceedings to contravene the provisions of Compani es Act for presenting deceptive information in the ASX statements. In addition, the court also found that the company as well as the concerned officials failed to act in good faith following the provisions of the Corporations Act. On the contrary, Australian Securities and Investment Commission failed to form the allegations against the group of James Hardie including senior executives. Accordingly, the court decided that the CEO of the company Mr. Macdonald and other senior executives failed to provide appropriate suggestions to the board of directors for compliance of section 180 and 199 under Corporations Act (Austlii.edu.au 2016). It was found that the secretary of the company, general counsel and CFO failed to verify the compliance of section 1041 and listing rules while disclosing the ASX announcement and other public statements. The Supreme Court of New South Wales held Mr. Macdonald guilty for non- compliance of section 180 subsection 1 of Corporations Act for approving the release of ASX final announcement without eliminating the misleading information. Similarly, while presenting and releasing the indemnity deed, the senior executives and directors failed to comply the provisions of section 995 and 999 in the best interest of the stakeholders and other investors. Therefore, the concerned officials i.e. directors, CEO, company secretary, general counsel and other senior executives held liable for civil penalty for contravention of Companies Act affecting the good faith and best interest of the public. Reference: Agrawal, A. and Cooper, T., 2015. Insider trading before accounting scandals.Journal of Corporate Finance,34, pp.169-190. Aryan, S. and Mirabbasi, B., 2016. Good Faith Principle and Its Consequences in Pre-Contractual Period: A Comparative Study on English and French Law, The.J. Pol. L.,9, p.232. Augustin, P., Brenner, M. and Subrahmanyam, M.G., 2015. Informed options trading prior to MA announcements: Insider trading?.Available at SSRN 2441606. Austlii.edu.au. 2016. Australasian Legal Information Institute (AustLII). [online] Available at: https://www.austlii.edu.au/ [Accessed 13 Dec. 2016]. Crane, A., Graham, C. and Himick, D., 2015. Financializing stakeholder claims.Journal of Management Studies,52(7), pp.878-906. Donner, I.H., 2016. Fiduciary Duties of Directors When Managing Intellectual Property.Nw. J. Tech. Intell. Prop.,14, p.203. Huang, Q., Jiang, F., Lie, E. and Yang, K., 2014. The role of investment banker directors in MA.Journal of Financial Economics,112(2), pp.269-286. Knepper, W.E., Bailey, D.A., Bowman, K.B., Eblin, R.L. and Lane, R.S., 2015.Duty of Loyalty(Vol. 1). Liability of Corporate Officers and Directors. Lee, C.C., Wu, Y.L., Huang, W.H., Lee, Y.C., Chen, P.R., Lee, H.R. and Chang, Y.W., 2016. Information disclosure, social responsibility, trust, and attitude affect loyalty to housing agents.Social Behavior and Personality: an international journal,44(5), pp.717-726. Madsen, P.M. and Rodgers, Z.J., 2015. Looking good by doing good: The antecedents and consequences of stakeholder attention to corporate disaster relief.Strategic Management Journal,36(5), pp.776-794. Mouraviev, N. and Kakabadse, N.K., 2015. PublicPrivate Partnerships Procurement Criteria: The case of managing stakeholders value creation in Kazakhstan.Public Management Review,17(6), pp.769-790. Ponsford, M.P., 2016. Corporate Governance and the Business Judgment Rule: Fiduciary Duties of Directors in Canada and The People's Republic of China.Journal of Civil Legal Sciences. Raithel, S. and Schwaiger, M., 2015. The effects of corporate reputation perceptions of the general public on shareholder value.Strategic Management Journal,36(6), pp.945-956. Ryan, S.G., Tucker, J.W. and Zhou, Y., 2015. Securitization and insider trading.The Accounting Review,91(2), pp.649-675. Tarr, J.A., 2015. A growing good faith in contracts.Journal of Business Law,2015(5), pp.410-415. Trautman, L.J., Triche, J. and Wetherbe, J.C., 2013. Corporate Information Technology Governance Under Fire.Journal of Strategic and International Studies,8(3).

Volumetric Analysis Chemistry Lab Report Sample

Volumetric Analysis Chemistry Lab Report Paper It must be understood that the number of moles of the reacting Noah and the number of moles of the product Nag acid, must both equal (in this case 1 11) in order for the calculation to find the molar mass to work. Procedure: Begin the procedure by first making sure all glassware has been cleaned. Next set up the burette for the titration using the same method as week 1. Similar to week 1 the titration is performed using Noah as a base in the solution so the burette should filled with the Noah and the initial volume may be recorded. The acid (acetic acid) should be mixed in solution with 5. 0 ml of acid and 50. 0 ml of water. The water can be added in excess because the hydrogen that bonds with the OH to make water as a product is already present in vinegar and so it doesnt bond with other water molecules. Once the solution is mixed the indicator is added and the titration process may be initiated. As the base is added to the solution a faint purple color appears and disappears. The c olor fades much slower as the titration is almost complete. After completion the final volume of the Noah in the burette was recorded and used in calculation. This entire process was repeated for a second titration. The average molarities of Noah was found and used to determine the percent acetic acid present in vinegar. After calculating the percent acetic acid in vinegar the second part of the experiment was initiated. The first step was weighing out two samples of the unknown acid to between given values on the container. Each sample was used in separate titration. Each titration was carried out using the same methods as before. Once the molar mass of each sample was found the values were then averaged and the deviation was found. We will write a custom essay sample on Volumetric Analysis Chemistry Lab Report specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Volumetric Analysis Chemistry Lab Report specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Volumetric Analysis Chemistry Lab Report specifically for you FOR ONLY $16.38 $13.9/page Hire Writer When solving for the percent of acetic acid present in vinegar the end result of 3. 57% was not far off from the standard 4%. The small error could be a result of error in experiment or an actual failure of the acid to meet the federal standard. An example of error in experimentation is while the solution is titrated completely, the flask being swirled is removed from underneath the burette and a drop or two of Noah can sneak out before the valve is closed. Those few missed drops as well as excess Noah in titration can affect the accuracy of the results. Human error is almost always a factor for example when measuring any values without digital assistance leaves room for the naked eye to make mistakes. As far as the second part of the experiment was, the 0. 0025% deviation indicates that the titration was accurate. The ending molar (202. 59 g/mol) of the mystery acid points to two possible suspects. The mass first being Cesium Determinate, and the second Sodium Determinate. Without the information it wasnt possible to determine which one it would be. There is also a chance that the results had small deviation (accurate) but were not precise. For example if both titration had error due to the mass of the samples being incorrect. There was also a potential error during the second titration. While adding the indicator to the acid solution the tip came in contact with the burette and the drop of indicator managed to seep up the burette into the Noah and so all the Noah that had turned purple had to be drained. Normally flushing the burette would get rid of the indicator but even after flushing the entire system there was still a faint purple lingering in the tip of the burette.