Well, our second issue is about the cause of change in regulation itself. The Fortune article summarizes what auditors at Arthur Anderson missed during their audit of Enron For later module, we will cover Enron case more in detail, so this is like a practice discussion before the real one comes.
Let’s discuss the following issues:
(1) In your opinion, what was the biggest mistake AA auditors made?
(2) From different source, Enron allegedly paid $25 million for audit service and $27 million for consulting services to Arthur Andersen, do you think AA sacrificed its independence for consulting and other non-audit fees?
(3) Many CPAs have complained that lots of CEOs and CFOs consider audit service a “commodity”. As a result, corporate executives don’t care much about the quality of audit service, and all they want is clean opinion from any auditors at the lowest audit fee (opinion shopping). How would a CPA firm differentiate itself from other firms when the firm is approached by a CFO shopping opinion?
Just like previous discussion, you don’t need to engage in all of the questions.