Regardless of whether the auditor was named as a defendant, do you think it should have caught the fraud?

1)General Case Information a)Name of Defendants (Company & Individual Defendants & their positions) (1 pointb)Jurisdiction where case is located (e.g. “SDNY” See first page of Complaint);c)Fraud Period (i.e., class period – you must use the shareholder consolidated amended complaint (not the press release nor the SEC complaint);d)Name of External Independent Auditor (which firm is signing the audit opinion);e)Description of the Accounting Fraud (e.g., “Revenue Recognition, Bill and Hold”, etc.). In addition, if there are any other frauds related such as corruption (e.g., bid rigging, FCPA) or asset misappropriation (e.g., embezzlement, looting), briefly discuss those. Provide example of journal entries made to effect and conceal.f)Name of any third party defendants (e.g., auditors, underwriters, etc.);g)Any parallel investigation (e.g., SEC, DOJ, State’s attorney generals, etc.);h)Name of a Competitor or Industry and SIC in which the company is classified (see EDGAR);B. What was each defendant charged with? (see both civil and criminal complaints) (you must use your own words do not block quote) (1 point): a)Criminal and civil claims and counts (not simply the statute cites; describe, as e.g., insider trading, wire fraud, securities fraud, etc.). Include also what the shareholder complaint charged the defendants with.b)What were the main GAAP, GAAS (if auditor named) violations (again not simply GAAP or GAAS platitudes, such as failure to supervise staff, etc. but describe briefly specifics, e.g., GAAP – fake receivables by debiting accounts receivables and crediting sales without support, etc.?)c)How was the fraud discovered (whistleblower, press investigation, etc.)?C. In regard to the defendants, including auditors, if applicable what is their status today? (1 point) a)Status of Case (Google; use news reports too):i)Sanctions – Civil, Criminal, etc.? or is the caseii)Still ongoing? (partial settlements, etc.?)b)Are defendants still with the Company (auditors still the same, etc.D.Management Discussion & Analysis (the MD&A, Item 7 to the Form 10-K) (1 point) a)What was management’s explanation for trends in accounts that were affected by the restatement both (see Text pp. 439-449 – Nike):i)Prior to the restatementii)Upon and after the restatement?iii)Comment on the differences between the two MD&As.b)Did management admit to fraud or was some other explanation provided? If so, what was that explanation?c)Were material weaknesses in internal controls reported:i)Before the fraud was revealed?ii)After the fraud was revealed?E.Motive and Opportunity (1 Point) a)What was the motive (alleged or otherwise) that each defendant, including the defendant auditors, if applicable, may have had to commit the fraud?i)For example, was compensation tied to stock price, etc.ii)Was the defendant company on an acquisition spree?iii)Was there insider stock selling during the fraud period?iv)Was the company having profitability or liquidity problems?v)Regardless of whether the auditor was named as a defendant, do you think it should have caught the fraud? If it should have caught the fraud, how could it have done so? If not, why not? Regardless of what you conclude, explain your response in depth; you must discuss what ratios or other analytical procedures (e.g., HZ and VT) and red flags of fraud that should have alerted the auditor to investigate further to determine whether indeed the fraud was taking place.b)Opportunity: Management Override? Internal Control Weaknesses, tone at the top, etc.?c)Was the fraud concealed? If so, how? (e.g., there was at least one case, where it appears that the fraudsters recorded false entries that appeared immaterial to several accounts – this technique has the effect of not setting off analytic red flags).F.Appendices (point or fractional point reductions for noncompliance) a)The report must include the input FinSas sheets for the primary defendant company (and the competitor, if extra credit is sought).b)If calculations are not provided for any ratios provided, in addition to F.1., the FinSas Output sheets must be provided for the defendant company and competitor.c)The horizontal and vertical calculations and output or its equivalents must be provided for both the defendant company and competitor.d)Z-Score calculations must be provided either in the body of the report or in the appendix.e)Spelling and grammar count; all academic integrity rules also apply to this report.