1. What are the effects of Minkow’s actions on the stakeholders? Explain.
2. Do you believe that auditors should be held liable for failing to discover fraud in situations such as ZZZZ Best? Is there any evidence that says they shouldn’t? Explain.
3. What red flags existed in the ZZZZ Best case? What should have been Ernst & Whinney’s actions with respect to audit risk? Explain.
4. Referring to the selected numbers from the financial statements of ZZZZ Best (under Questions at the end of the case) for the fiscal years 1985 and 1986, what calculations or analyses would you make with respect to these numbers that might help you assess whether the financial relationships are reasonable, and how would they help this assessment?
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