Zzzz Best Case Summary

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ZZZZ Best Case Summary 1. A review differs from an audit in terms of assurance. An audit has a higher level of assurance than a review. An audit takes a deep look at the internal controls of a company as well as looking for any material misstatements or fraud in the company’s financial statements. An auditor only looks at financial statements during a review without digging deeper to find any material misstatements or potential fraud, there is no review of the company’s internal controls, also the auditor does not look at any files that backup the financial statements they are given. In this case, the owner of the company hindered the auditor’s from doing their due diligence because he did not want his fraud discovered. 2. According to AU 326 of the Public Company Accounting Oversight Board, information from outside sources should be reliable. There should have been many substantive tests performed, objectives set forth, due diligence for true existence or occurrence of any files or contracts. Confirmation of the insurance contracts was given by Tom Padgett of Interstate Appraisal Services, therefore there was collusion outside of the company by third parties and the auditors had no control of learning this information. There was an elaborate scheme to fool Larry Gray, a representative of Ernst & Whinney, when he visited the site of a supposed major restoration project by ZZZZ Best. Several rules were implemented by, the owner, Barry Minkow. These “rules” should have sent up red flags for Ernst & Whinney to proceed with caution or decline ZZZZ Best as a client. 3. Greenspan took everything as truth with first looks and never bothered to do an in-depth study of the transactions. Greenspan stated he performed various analytical procedures to identify unusual relationships in the company’s financials. Greenspan actually relied on copies of contracts
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