Post on 05-Mar-2023
transcript
REASONSto buy your textbooks
and course materials at_ «00111
CENG AGE brainSAVINGS:Prices up to 75% off, daily coupons, and free shipping on orders over $25
CHOICE:Multiple format options including textbook, eBook and eChapter rentals
CONVENIENCE:Anytime, anywhere access of eBooks or eChapters via mobile devices
SERVICE:Free eBook access while your text ships, and instant access to online homework products
STUDY TOOLS:Study tools’ for your text, plus writing, research, career and job search resources'availability varies
Find your course materials and start saving at:www.cengagebrain.com
Source Code: 14M-AA0107
Engaged w ith you. / V C E N G A G Ew w w .c e n g a g e .c o m
Ị - b l\> h ạ '•
C ontemporary A uditingReal Issues and C ases
Tenth Edition
Michael c. KnappUniversity of Oklahoma
CENGAGE * * Learning'
Australia • Brazil • Japan • Korea • Mexico • Singapore • Spain • United Kingdom . United States
CENGAGELearning"Contemporary Auditing: Real Issues and Cases, Tenth EditionMichael c. Knapp
Product Director; Rob Dewey Product Manager: Matt Filimonov Content Developer: Theodore Knight Product Assistant: A. J. Smiley Associate Marketing Manager: Courtney Doyle-Chambers Senior Marketing Manager:Robin LeFevreSenior Manufacturing Planner;Doug WilkeArt and Cover Direction, Production Management, and Composition: Integra Software Services Pvt. Ltd. Intellectual Property
Analyst: Christina Ciaramella Project Manager; Anne SherofF
Cover Image: © iStockphoto.com/ Robert Churchill
© 2015,2013 Cengage Learning
WCN:0M00-101
ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced, transmitted, stored, or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, Web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher.
For product information and technology assistance, contact US at Cengage Learning Customer & Sales Support, 1-800-3S4-9706
For permission to use material from this text or product, submit all requests online at www.cengage.com/permissions
Further permissions questions can be emailed to permissionrequest@cengage.com
Library of Congress Control Number; 2014936225
ISBN: 978-1-285-06660-8
Cengage Learning20 Channel Center Street Boston, MA 02210 USA
Cengage Learning is a leading provider of customized learning solutions with office locations around the globe, including Singapore, the United Kingdom, Australia, Mexico. Brazil, and Japan. Locate your local office at: www.cengage.com/global
Cengage Learning products are represented in Canada by Nelson Education, Ltd.
To learn more about Cengage Learning Solutions, visit www.cengage.com
Purchase any of our products at your local college store or at our preferred online store www.cengagebrain.com
Printed in the United States of America Print Number: 01 Print Year; 2014
BRIEF CONTENTS
P reface xxiii
SECTION 1 Comprehensive Cases 11.1 Enron Corporation 31.2 Lehm an Brothers Holdings, Inc. 231.3 Just for FEET, Inc. 391.4 Health M anagem ent, Inc. 531.5 T he Leslie Fay C om panies 711.6 NextCard, Inc. 831.7 Lincoln Savings and Loan A ssociation 931.8 Crazy Eddie, Inc. 1071.9 zzzz Best Company, Inc. 1171.10 DHB Industries, Inc. 1311.11 New Century Financial Corporation 1471.12 Madoff Securities 1651.13 AA Capital Partners, Inc. 1751.14 Navistar International Corporation 1851.15 Livent, Inc. 199
SECTION 2 Audits of High-Risk Accounts 2 1 32.1 Ja ck Greenberg, Inc. 2152.2 Golden B ear Golf, Inc. 2232.3 Take-Two Interactive Softw are, Inc. 2312.4 General Motors Com pany 2392.5 Lipper Holdings, LLC 2452.6 CBI Holding Company, Inc. 2532.7 G eo Securities, Inc. 2592.8 Belot Enterprises 2652.9 Powder River Petroleum International, Inc. 2712.10 LocatePlus Holdings Corporation 281
SECTION 3 Internal Control Issues 2 8 73.1 T he Trolley Dodgers 2893.2 Howard Street Jew elers, Inc. 2913.3 United Way of A m erica 2933.4 First Keystone Bank 2993.5 G oodner Brothers, Inc. 3033.6 Buranello's Ristorante 3113.7 Foam ex International, Inc. 317
B r ie f C o n t e n t s
3.8 The Boeing Company 3213.9 Walmart de Mexico 327
SECTION 4 Ethical Responsibilities of Accountants 3334.1 Creve Couer Pizza, Inc. 335
4.2 F&c International, Inc. 339
4.3 Suzette Washington, Accounting Major 343
4.4 Freescale Semiconductor, Inc. 345
4.5 Wiley Jackson, Accounting Major 349
4.6 Arvel Smart, Accounting Major 351
4.7 David Quinn. Tax Accountant 353
4.8 Dell, Inc. 357
4.9 Accuhealth, Inc. 361
4.10 Wichita Falls 367
SECTION 5 Ethical Responsibilities of Independent Auditors 3695.1 Cardillo Travel Systems, Inc. 371
5.2 American International Group, Inc. 377
5.3 The North Face, Inc. 381
5.4 IPOC International Growth Fund, Ltd. 389
5.5 Phillips Petroleum Company 395
5.6 Ryden Trucking, Inc. 399
5.7 Richard Grimes, Staff Accountant 403
SECTION 6 Professional Roles 4056.1 Leigh Ann Walker, Staff Accountant 407
6.2 Bill DeBurger, In-Charge Accountant 409
6.3 Hamilton Wong, In-Charge Accountant 413
6.4 Tommy O’Connell, Audit Senior 417
6.5 Avis Love, Staff Accountant 421
6.6 Charles Tollison, Audit Manager 425
SECTION 7 Professional Issues 4297.1 Ligand Pharmaceuticals 4317.2 Sarah Russell, Staff Accountant 437
7.3 Bud Carriker, Audit Senior 441
7.4 Hopkins Ư. Price Waterhouse 447
7.5 Fred Stern & Company, Inc.(Ultramares Corporation V. Touche et a/.) 455
7.6 First Securities Company of Chicago(Ernst <& Ernst V. Hochfelder et aP) 463
7.7 Elizabeth Wallace, Audit Senior 469