In this section, we cover potential answers to questions and references/guidance to other resources for further discussions depending on the students' interests. Since critical thinking is a key objective of these cases, the following solution is not exhaustive of all possibilities that students or faculty might discuss.
The creation of the Public Company Accounting Oversight Board (PCAOB) represents a major shift away from audit industry self-regulation. This case focuses on one of the many responsibilities of the PCAOB: the inspection of audit firms. To execute audit firm inspections, the PCAOB inspectors select work paper files of audit firms that audit companies listed on U.S.-based exchanges for review, using a risk-based approach. In our case, the PCAOB provides advance notice of the work papers to be reviewed during the inspection process.
Deficiencies noted during the inspection process can be costly if they result in the issuance of Part I or Part...