Question 5 In the Crazy Eddie case, there were many problemsrelating to the auditing firm and their auditing procedures. (1>The auditors of Crazy Eddie were subject to certain broad criticismsregarding the audit engagement, some of which may have impaired their independence. Identify and briefly explain these criticisms. (2>For the Crazy Eddie case, identify specific deficiencies in the auditors' procedures that ledto their failureto discover financial statement fraud. For each weakness in auditing: procedures identified, recommend an alternative approach/procedure that should have led· to the detection of the frauds in question.

Explain how the circumstances under each of the following might reflect failed leadership by auditors and the audit firm: • Under-reporting of time on an engagement• Premature sign-off on audit procedures• Accepting weak client explanations for accounting

Question 4 Respond to each of the following independent situations involving auditor reports. For each scenario (1)identify the reporting issue involved; (2) explain the type of opinion that should be issued; (3) identify any requiredmodifications of the standard auditor'sreport. The auditor has a disagreem ent with a client overthe adequacy of the recorded bad debt expense and allowance for doubtful accounts. The auditor is convinced that the expense and allowance are understatedby amaterial (but not highly material) amount, but the client has refused to adjust the accounts. 1.4 The auditor has issued a report on a client's financial statem ents prepared on a regulatory basis of accounting. The auditor is also preparing to issue a separate report- on the same client's GAAP financial statements, which will be issued to the public. The auditor feels that the issuance of the report on the regulatory basis statements should be disclosed in the report on the GAAP statements. The auditor…

Question 4 The  auditor of a large public company has determined that a material weakness exists in the client's internal controls over financial reporting. Which of the following statements is true?     Weakness require an adverse opinion on the financial statements taken as a whole.     The auditor should express an adverse opinion on internal controls only if a material misstatement was found in the financial statements.     The auditor should express and adverse opinion on internal controls even though no material misstatements were found in the financial statements.     The auditor is not required to express an opinion on internal controls.