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Crazy Eddie Essay

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Below is an essay on "Crazy Eddie" from Anti Essays, your source for research papers, essays, and term paper examples.

Crazy Eddie





Term A2/ Spring, 2015
March 25, 2015




Table of Contents

Issues.........................................................................................................................1
Facts..........................................................................................................................2
Analysis and Law......................................................................................................6
Conclusion/ Recommendations…………………………………………….……..10




















Issues

1. Identify audit procedures that, if employed by Ernst & Whinney during the 1981 USSC audit, might have detect overstatement of leased and loaned assets account that resulted from the improper accounting for asset retirements?

2. In 1981, USSC extended the useful lives of several of its fixed asset and adopted salvage values for many of these same assets for the first time. Are these changes permissible under generally accepted accounting principles? Assuming these changes had a material effect on USSC’s financial condition and results of operations, how should the changes have been disclosed in the company’s financial statements? How should these changes have affected Ernst & Whinney’s 1981 audit opinion? (Assume that current audit reposting standards were in effect at the time.)

3. Prepare common sized financial statements for USSC for the period 1979-1981. Also compute key liquidity, solvency, activity, and profitability ratios for 1980 and 1981. Given these data, identify what you believe were the high risk financial statements items for the1981 USSC audit?

4. What factors in the auditor- client relationship create a power imbalance in favor of the client? Discuss measures that the profession could take to minimize the negative consequences of this power imbalance.

5. Regarding the costs incurred for USSC by Baren, identify (a) the evidence hope collected that supported USSC’s claim...

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