Do you agree with the PCAOB that large audit firms should disclose this information? What are the benefits? Who benefits? What are the costs?
If you were on the Audit Committee of the Board of Directors, would you avoid hiring a diligent auditor, one that had a history of discovering internal control weaknesses in other auditees?
How would you determine willful intent to mislead shareholders with respect to revenue recognition, if you were the lead prosecutor investigating Power Solutions International?
Roadrunner Transportation is accused of willful misconduct in creating a cookie jar reserve to boost earnings. Not that you should practice this, but how is that done exactly? Should firms be allowed to reverse split just to stay on an exchange?
The pressure to hit Wall Street consensus expectations can make some go over to the “dark side.” How prevalent is this tendency, in your opinion? What additional steps do you think could or should be done to prevent such behaviors?
Why do you suppose larger firms, which presumably are more complex, have fewer accounting restatements than smaller firm?
Do you think that the proposed CHOICE act, if passed, would lead to an increase of financial fraud cases? Why or why not? If you were the CFO of a “smaller” company, would you still want your internal controls audited?
Do you think it is appropriate to hold individuals (such as a named CFO) liable for errors in financial reporting? Why or why not? What are the consequences for bringing talented individuals into CFO roles?
Firms who are “heavy users” of non-GAAP (pro forma) earnings measures (“EBBS”) seem to have a higher propensity of accounting problems, resulting in accounting restatements. What might be the connection? If the relation between use of non-GAAP measures and accounting problems is established to be systematic, what do you propose as a solution?
Accounting errors, revisions, restatements are down over the past decade, but they still are nontrivial in many cases. How would you determine whether the issues cited are relevant to market participants?
Re: Crazy Eddie, what happened to gross margins over time? How might this be an indicator of accounting issues?
Re: Sunbeam, if you can put yourself in the audit partner’s position, do you think you might have been inclined to sign off on the engagement, notwithstanding the knowledge of the accounting issue?
Re: Sunbeam, what was Dunlap’s nickname? What are “cookie jar” reserves? How could the Sunbeam issues have been prevented?
Re: CalMicro, what are some of the indicators that may have suggested that “something” was amiss in the accounting?
Re: WorldCom, can you recreate the journal entry that took “line costs, fees paid to lease portions of other companies’ telephone networks, out of operating-expense accounts where they belonged and tuck them into capital accounts”?
