What Lessons About Auditor Expectations and Client Performance in Analytical

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The Answer is The WorldCom auditors are alleged to have done a great deal of analysis based on the expectation that results would be similar to prior years. The volume of analysis undertaken cannot make up for the apparent lack of familiarity with the client's industry. The worldwide telecommunications industry was undergoing a rapid transformation due to excess capacity, and hence expectations that results would be the same as last year were completely inappropriate. When the auditor observed that important financial items were close to the levels of the prior year, the auditor should immediately have begun further investigation. Basically, WorldCom capitalized expenditures which should have been expensed. Typically, fixed asset additions are scrutinized but for some reason, these new assets were not scrutinized.

What Lessons About Auditor Expectations and Client Performance in Analytical

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