Jack Greenberg, Inc. Essay example
1. Family owned business is a business that is owned by one family, most of the shareholders are from the same family. One of the major problems in this type of business is a conflict in interests among the family’s member. The auditor should be careful and observe the type of the relationship among the family’s member. There should be a written agreement to specify rights, duties, and obligations for each member, the auditor should read those documents for further information. One issue that faced the auditor is to understand the attitude of each member, the risk of manipulating facts can be existed due to the close relationship. In the case of Jack Greenberg, the son has manipulated the numbers in the record …show more content…
5. I would highly recommend that the auditor should extend the scope of substantive test and increase the sample size in order to discover other misstatements that existed. The auditor also could trace documents to testify whether the inventory has been listed accurately. Analytical procedure and test of detail as part of substantive test to find the relationship between the inventory account and other accounts in the financial statements. Cut off test with physical observation to the inventory would help to discover fraud and any misstatement in the inventory account. In addition, the auditor may use confirmation to confirm amount listed in the record with third parties.
6. I think the audit firm responsibility is to inform the client that there are weaknesses in their current internal control however the audit firm does not have the right to force the client to do some action regarding those