Executive summary
The following report is explaining a case study about a clothing retailer, which is Merry – Go –Round (MGR).this retailer have a problem of a Lawsuit allegation with E&Y ( the accounting firm ) , after the client( MGR ) is claimed that E&Y are caused more damages to them by giving incompetence advise, instead of giving a good restructuring and consulting advice , to help MGR to overcome their significant financial difficulties.MGR was Filed bankruptcy after they hired E&Y by suggestion of MGR’s Lawyers Swidler and Berlin ,this case was one of the must shocking lawsuit cases against one of the big fours ( E&Y).the case is showing how the failure of committing the auditing principles, and the work ethics of the profession …show more content…
By the early 1990s, the company had gone public and had expended to approximately 1,500 stores, 15,000 employees, and 1 billion in annual sales. The company location in the malls targeted the youth and teen market. The company was listed by Forbes magazine as one of the 25 companies in the late 80s. However, in the early 90s, the company faced many challenges. One of it is co founders died and the other left to pursue unrelated business interests. The company faced stiff competition from other retailers (The gap and banana republic), fashion trends changed and mall traffic declined. Sales fell, and experts speculated that MGR failed to anticipate key industry trends and lost sights of its customers markets. To try to regain and it is strong position, the company acquired Chess King, inc. a struggling chain of men’s clothing stores located in malls, in 1993( principles of auditing book, ninth edition, chapter …show more content…
part one of the case is shedding the light on the GAAS principles that E & Y are failed to use in the work field to advice Merry Go Round retailer , and its explains why they violated some of the GAAS. However, the second part of the case is about the Ethical demission of the audit work that E&Y are failed to conduct in their work with MGR.
2-27: Merry-Go-Round Part I
a. Although this was not an audit engagement for E&Y, some of the allegation against the firm can be framed in terms of the 10 generally accepted auditing standards. Which of the 10 GAAS was E&Y alleged to have violated?
E&Y is suspected to have violated the three general standards as well as one, and possibly two, of the standards of field work of auditing.
• They violated the first general standard, because it seemed to appear that the staff assigned to the management did not have sufficient training or experience for the engagement.
• E&Ys relationship with MGRs landlords and lawyers is likely caused them to break the second general standard, which requires independence in mental
The following report is explaining a case study about a clothing retailer, which is Merry – Go –Round (MGR).this retailer have a problem of a Lawsuit allegation with E&Y ( the accounting firm ) , after the client( MGR ) is claimed that E&Y are caused more damages to them by giving incompetence advise, instead of giving a good restructuring and consulting advice , to help MGR to overcome their significant financial difficulties.MGR was Filed bankruptcy after they hired E&Y by suggestion of MGR’s Lawyers Swidler and Berlin ,this case was one of the must shocking lawsuit cases against one of the big fours ( E&Y).the case is showing how the failure of committing the auditing principles, and the work ethics of the profession …show more content…
By the early 1990s, the company had gone public and had expended to approximately 1,500 stores, 15,000 employees, and 1 billion in annual sales. The company location in the malls targeted the youth and teen market. The company was listed by Forbes magazine as one of the 25 companies in the late 80s. However, in the early 90s, the company faced many challenges. One of it is co founders died and the other left to pursue unrelated business interests. The company faced stiff competition from other retailers (The gap and banana republic), fashion trends changed and mall traffic declined. Sales fell, and experts speculated that MGR failed to anticipate key industry trends and lost sights of its customers markets. To try to regain and it is strong position, the company acquired Chess King, inc. a struggling chain of men’s clothing stores located in malls, in 1993( principles of auditing book, ninth edition, chapter …show more content…
part one of the case is shedding the light on the GAAS principles that E & Y are failed to use in the work field to advice Merry Go Round retailer , and its explains why they violated some of the GAAS. However, the second part of the case is about the Ethical demission of the audit work that E&Y are failed to conduct in their work with MGR.
2-27: Merry-Go-Round Part I
a. Although this was not an audit engagement for E&Y, some of the allegation against the firm can be framed in terms of the 10 generally accepted auditing standards. Which of the 10 GAAS was E&Y alleged to have violated?
E&Y is suspected to have violated the three general standards as well as one, and possibly two, of the standards of field work of auditing.
• They violated the first general standard, because it seemed to appear that the staff assigned to the management did not have sufficient training or experience for the engagement.
• E&Ys relationship with MGRs landlords and lawyers is likely caused them to break the second general standard, which requires independence in mental