Auditing Article Review
Read the two attached articles, Wirecard Shares Tumble as Questions Remain After Special Audit (The Wall Street Journal, April 28, 2020, Paul J. Davies) and Ernst & Young Loses Two German Clients Amid Wirecard Scandal (The Wall Street Journal, Sept. 2, 2020, Patricia Kowsmann), then answer the critical thinking questions listed below. Note: ALL of these questions should be answered from a US perspective (although the client in question is a German company). Use the independence and evidence-related discussions we had in class, as well as Chapters 1 & 2 and Module B of your textbook, to guide your answers. Questions (20 points total): 1. (5 points) Write a short 1 paragraph summary of each article. 2. (5 points) While KPMG was conducting a special audit over the allegations made against Wirecard, the audit team ran into some issues relating to gathering sufficient appropriate evidence. a. Discuss one of these issues and explain how it impacts either the appropriateness (e.g., relevance or reliability) or sufficiency of the evidence. 3. (5 points) As an auditor, how would not being able to gather sufficient or appropriate audit evidence impact the final audit opinion? 4. (5 points) It can be argued that the independence of the EY audit team was impaired in this situation, which resulted in the team missing a material issue. Out of the threats to independence we discussed in class (adverse interest, advocacy, familiarity, financial, etc.), describe one you think was present in this case and why. Make sure to define the threat when you answer this question.