answer questions on two cases

Case 1:

Please answer these questions passed on the attachment case:

1- See the “Overstock.com, Inc.” case for this question.

The Overstock-Grant Thornton dispute was publicly aired via disclosure statements filed with the SEC. What impact do you believe those disclosures had on the investing public’s confidence in the financial reporting domain and the independent audit function? Were the interactions between Overstock and Grant Thornton unprofessional or otherwise inappropriate? Explain.

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2- See the “Overstock.com, Inc.” case for this question.

Do you believe that the $785,000 amount at the center of the Overstock-Grant Thornton dispute was material? Defend your answer. What factors other than quantitative considerations should have been considered in deciding whether the $785,000 amount was material?

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3- See the “Overstock.com, Inc.” case for this question.

Briefly compare and contrast the nature and purpose of an independent audit versus a quarterly review.

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4- See the “Overstock.com, Inc.” case for this question.

The SEC requires registrants to have their quarterly financial statements reviewed by an independent accounting firm but does not mandate that a review report be included in a Form 10-Q. Under what circumstances must a review report accompany quarterly financial statements in a 10-Q? Why doesn’t the SEC routinely require public companies to include their review reports in their 10-Q filings?

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5- See the “Overstock.com, Inc.” case for this question.

What is the purpose or purposes of Form 8-K filings by SEC registrants? What specific items of information must be included in an 8-K that announces a change in audit firms?

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6- See the “Overstock.com, Inc.” case for this question.

Do you agree with the accounting treatment that Overstock typically applied to the revenues generated by its “Partner” line of business? Why or why not?

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– Make sure that your answers have (0%) plagiarism.

– answer with details.

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Case 2:

Answer these questions passed on the attachment case:

1- See the “Take-Two Interactive Software, Inc.” case for this question.

Analyze Take-Two’s 1998-2000 financial data included in Exhibit 1. Compute the following financial ratios for each of those years: age of accounts receivable, age of inventory, gross profit percentage, profit margin percentage, return on assets, return on equity, current ratio, debt-to-equity ratio, and the quality-of-earnings ratio. What major “red flags,” if any, were present in Take-Two’s financial statements given these ratios? Explain.

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2- See the “Take-Two Interactive Software, Inc.” case for this question.

Identify the primary audit objectives that auditors hope to accomplish by confirming a client’s year-end accounts receivable. Explain the difference between “positive” and “negative” confirmation requests and discuss the quality of audit evidence yielded by each.

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3- See the “Take-Two Interactive Software, Inc.” case for this question.

Identify audit tests that may be used as alternative audit procedures when a response is not received for a positive confirmation request. Compare and contrast the quality of audit evidence yielded by these procedures with that produced by audit confirmation procedures.

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4- See the “Take-Two Interactive Software, Inc.” case for this question.

In your opinion, did the apparent mistakes made by the PwC auditors in auditing Take-Two’s receivables and reserve for sales returns involve “negligence” on their part? Would you characterize the mistakes or errors as “reckless” or “fraudulent”? Justify your answers.

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5- See the “Take-Two Interactive Software, Inc.” case for this question.

Is it appropriate for audit firms to sharply discount their professional fees for developmental stage companies? Why or why not? What problems, if any, may this practice pose for audit firms?

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6- See the “Take-Two Interactive Software, Inc.” case for this question.

Do you believe that the relationship between Robert Fish and Ryan Brant was inappropriate? Explain.

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7- See the “Take-Two Interactive Software, Inc.” case for this question.

Should audit firms accept “ethically challenged” companies and organizations as audit clients? Defend your answer.

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– Make sure that your answers have (0%) plagiarism.

– answer with details.

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