Case 2.9 Powder River Petroleum International, Inc Essay

971 Words Sep 23rd, 2015 4 Pages
1. Primary audit risk factors that were evident within Powder River’s operations are:
• Fraudulent Financial Reporting Risk for Revenue
• Other Areas of Fraud Risk. From year-end 2004 through the first-quarter 2008, defendant Brian Fox misled the investing public by fraudulently inflating the revenue and assets and fraudulently omitting major liabilities, of Powder River Petroleum International, Inc. (“Powder River” or the “company”) in the company’s Commission filings, and by making other false and misleading public disclosures. From year-end 2004, Powder River conveyed working interests in oil and gas leases to investors in Asia for over $43 million. Because Powder River promised full repayment of the working interest
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5. Relying on only a few pages from each of the specialists' reports. Further, Chisholm and the Firm took no steps to evaluate the professional qualifications of the specialists to determine if they’d possessed the necessary skill or knowledge to perform the work; nor did they obtain an understanding of the nature of the specialists' work, including the objectives and scope of that work. Chisholm and the Firm failed to evaluate the specialists' relationship with the issuer. Finally, Chisholm and the Firm failed to perform procedures to obtain an understanding of the methods and assumptions used by the specialists, to make appropriate tests of the data provided to and used by the specialists, or to evaluate whether the specialists' findings supported the related assertions in the financial statements.
6. PCAOB rules require that a registered public accounting firm comply with certain quality control standards. A firm should establish policies and procedures to encompass, among other things, (a) personnel management, (b) acceptance and continuance of clients and engagements, and (c) engagement performance.
• PCAOB standards require a firm to "undertake only those engagements that the firm can reasonably expect to be completed with professional competence. In calendar years 2006 and 2007, the Firm failed to comply with this

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