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    Case 5.5: The Baptist Foundation of Arizona: Presentation and Disclosure of Related Parties

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    Case 5.5: The Baptist Foundation of Arizona: Presentation and Disclosure of Related Parties

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    78 views8 pages
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    SPPTCase5_5

    Copyright:

    © All Rights Reserved
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    Download as ppt, pdf, or txt
    78 views8 pages

    Case 5.5: The Baptist Foundation of Arizona: Presentation and Disclosure of Related Parties

    Uploaded by

    Zizid
    SPPTCase5_5

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 8

    Case 5.

    The Baptist Foundation of


    Arizona: Presentation and
    Disclosure of Related
    Parties

    Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
    BFA Case
    Relevant Technical Knowledge
    AU Section 334 – Paragraph 4
     “the auditor should be aware of the possible
    existence of material related party transactions
    that could affect the financial statements.”
    AU Section 334 – Paragraph 5
     “in determining the scope of work to be
    performed with respect to possible transactions
    with related parties, the auditor should obtain an
    understanding of management responsibilities
    and the relationship of each component to the
    total entity.”

    2
    BFA Case
    Relevant Technical Knowledge
    PCAOB AS #12 – Paragraphs #23-25
     “because of its importance to effective
    internal control over financial reporting,
    the auditor must evaluate the control
    environment at the company.” The
    control environment is influenced heavily
    by a company’s management team and is
    therefore often referred to as “the tone at
    the top”.
    3
    BFA Case
    Relevant Technical Knowledge
    PCAOB AS #5
     Paragraph # 28 – “relevant assertions are
    those financial statement assertions that
    have a reasonable possibility of
    containing a misstatement that would
    cause the financial statements to be
    materially misstated.”
     Paragraph #30 – “what could go wrong?”

    4
    BFA Case
    Relevant Technical Knowledge
    PCAOB AS #5 – Paragraph #39
     “the auditor should test those controls
    that are important to the auditor's
    conclusion about whether the company's
    controls sufficiently address the assessed
    risk of misstatement to each relevant
    assertion.”

    5
    Psychology Literature -
    How to Best Acquire Knowledge
     Feature Repeated Case Experiences with
    Feedback; and
     Teach Technical Concepts within Real-
    Life Contexts
     Consider the following additional cases:
     The Fund of Funds: Valuation of Investments
     Enron: Presentation and Disclosure of Special Purpose
    Entities
     Qwest: Occurrence of Revenue

    6
    Epilogue - BFA
     BFA filed for Chapter 11 bankruptcy
    protection

     BFA filed suit against Arthur


    Andersen for negligence, causing
    the accounting firm’s bankruptcy

    7
    Epilogue - BFA
     Arthur Anderson paid $217 million
    to settle investor lawsuits

     Former president William Pierre


    Crotts and chief legal counsel
    Thomas Grabinski convicted of three
    counts of fraud

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