Worldcom s Management Team A Lack Of Professional...

2) WorldCom’s management team was hesitant to communicate with Arthur Andersen, this an issue that revealed a lack of professional skepticism that Andersen exercised. There are many examples and observations that show a lack of professional skepticism shown by Andersen. Some of these observations include; 1) A failure to request supporting evidence for recorded transactions that needed it; 2) Several request for interviews and information were denied by WorldCom when Andersen asked for these request; 3) WorldCom failed to disclose vital information to the Audit Committee at WorldCom such as their maximum risk classification; 4) WorldCom’s top management prohibited auditors from Arthur Andersen from gaining access to the computerized general ledger 3) The two primary ways of conducting substantive tests are (1) substantive analytical review and (2) test of details. A substantive test is used to gather evidence that proves whether an account balance or an economic transaction was recorded in accordance with GAAP. When using substantive analytical reviews, an auditor must first develop their own expectation of what they think the account balance should be and once developed, the expectation is compared to what the recorded amount is. This technique is used to identify any possible material misstatement. Significant differences have to be investigated and supported with evidence. This process must be done with exact precision and a high degree of accuracy. SubstantiveShow MoreRelatedEthics and Professional Responsibility2705 Words   |  11 Pagesor prevent firms from doing immoral acts. Before Sarbanes-Oxley Act of 2002, auditing for both public and privately held companies followed the AICPA s standards of the 10 generally accepted auditing standards. In the years 2000-2002, there had been an increased of major corporate accounting scandals. Large corporations such as Enron and WorldCom went into bankruptcy by trying to cover up their losses and debt. In response to the all the fraud, the US government passed the Sarbanes-Oxley Act. TheRead MoreAudit Cases14211 Words   |  57 PagesProfessional and ethical issues c a S eS inc lu de d in t hiS Se ction 3 . . . . . . . . . . . . . . . . 3.1 A Day in the Life of Brent Dorsey Staff Auditor Professional Pressures 59 63 65 71 79 3.2 Nathan Johnson’s Rental Car Reimbursement Solving Ethical Dilemmas–Should He Pocket the Cash? Recognizing It’s a Fraud and Evaluating What to Do . . . . . . 3.3 The Anonymous Caller 3.4 WorldCom The Story of a Whistleblower . . . . . . . . . . . . . . . . . . . . . . . . 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