The Audit Failures of Both Enron and WorldCom Were Examples

question 22

Multiple Choice

The audit failures of both Enron and WorldCom were examples in which the leadership responsibilities for quality work within the accounting firm were overshadowed by fears that losing a key client would

• A)result in shareholder losses from reduced company profitability.
• B)require additional audit procedures and increase the fees paid by the companies to the accounting firm.
• C)negatively influence the results of the firm's inspection.
• D)negatively impact individual auditors' performance evaluations.

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Definitions:

Materially Altered

A change in a document or agreement that significantly affects its terms or conditions.

Holder In Due Course

A legal term for a person who has acquired a negotiable instrument in good faith and for value, and thus is protected against certain defenses and claims that could be raised against the original payee.

Payee

The party in a transaction who receives the payment.

Properly Delivered

Pertains to goods or documents being conveyed to the correct recipient in good condition and within the agreed timeframe.