Case 8.1 Livent, Inc.

800 Words4 Pages
Case 8.1 Livent, Inc. 1.) A common inherent risk that the entertainment industry company Livent, Inc had taken part in was the override of internal controls by upper management. These executives were not educated in the financial field, and should not have instructed the accounting department to make adjustments to the company’s computerized accounting system. An additional risk was how Livent, Inc would take costs for one show and place it on to another that was more successful. The audit procedures for a theatrical production include reviewing the costs and income of several shows and at different intervals. This would be completely opposite to a company that manufactures a product with a more defined cut-off period. 2.) The responsibilities of an audit partner in an accounting firm is to review the accounting actions performed by their client and notify them of any corrections that are required. The CFO of a large public company should oversee all of the company’s finances so that it is steered in the right direction. The audit partners role is weighted heavier in that their responsibility is to the public, not just one company. If the CFO is unable to do his/her duties, then the audit partner should find and report those inaccuracies. The stress of the audit partner is tremendous and choosing that profession is one that I would prefer not to undertake. The anxiety and pressure to certify that a company’s financial records are in good standing can be daunting. 3.) Independent auditors are sometimes perceived as the “necessary evil” by corporate executives because of the possibility of exposing corruption. To change this point of view an auditor can try to explain their intent to educate and improve the company’s policies, which can in turn lower costs. 4.) An accounting firm has a few responsibilities when it is retained to issue a report

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