1. Identify quality control procedures for accounting firms that might have resulted in Peat Marwick avoiding the problems it experienced on the NSMC engagements. Do accounting firms presently employ these procedures?
Peat Marwick should have asked Arthur Anderson of the reason why they resigned the audit of NSMC. Instead of asking "the question" they asked them "whether there was any reason it should not accept NSMC as an audit client." And they relied that there were not aware of a reason to deny NSMC as an audit client. Because of this they engaged in the audit.
Accounting firms presently employ this procedure in order to find out the truth of what the reason for the resignation of the predecessor was all about. This gives an audit firm an idea of what has undergone and can be one criteria of choosing the audit client. By asking the predecessor why they left the audit client they have insurance if the predecessor deceives them into thinking there was nothing wrong. Usually you......
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Approximate Word Count: 1262
Approximate Pages: 5 (260 words per double-spaced page) |