Cable Co Case
Question 5 What qualities does CableCo appear to be looking for in an audit firm?
Firms usually switch audit firms whenever they are dissatisfied with their current firm. They could have many different motives that include disagreements about the fees, company not meeting deadlines, or even the audit firm quitting because the company wanted to do something illegal. Another reason a company might switch firms is because a former auditing firm may have dropped the company for failing to comply with audit requests or for routine late payments.
The CEO from CableCo is looking for another Auditing Firm because he wants to move his company at a fast pace. He needs a firm that will help him grow at the pace he wants. He also needs someone who can handle acquisitions quickly and efficiently. He claimed that he almost lost a deal due to the other firm taking a longer time with the acquisition report. He also needs someone who understands how the cable industry works. He may want a firm that already understands his industry so that he does not have to waste time teaching and explaining the basic
Question 6 Who are the auditors working for, Company’s management or it’s shareholders?
The auditors have to be able to work with independence. Auditors are working for shareholders, preparing reports and turning them over to the company’s banks, they also warn when management is doing anything misleading. Auditors have to be independent but many times, this independence is compromised or threatened by upper management in companies where they are trying to hide something. Many times management will try to threaten or pay auditors into omitting certain parts of their report. The auditors, even though hired and paid by the company being audited, are regarded as independent auditors.