The Tyco International Scandal: How did auditing play a role?
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Discuss how auditing may have played a role in the failure of Tyco International. How did the audit process potentially contribute to the firm's failure? What could have been done better, assuming there were deficiencies?
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Solution Summary
Your tutorial is 345 words and discusses how the audit contributed to the downfall of Tyco. The discussion gives three ideas for what the auditors at Tyco might have done to have improved the audit.
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The auditors were charged with assuring that "all was well" at Tyco. If they had not issued a "clean opinion" on Tyco's financial statement, the bankruptcy might have been averted by stopping the massive acquisition spree and cutting back on the excessive bonuses. The auditors also turned a blind eye when the firm was incorporated offshore to avoid taxes.
If the auditors had classified the audit as "high risk" and had examined the board of directors more closely, they might have sounded the alarms and gotten the company to stop the high risk behaviors and potentially save the firm from disaster. Instead, they issued a clean opinion and so no one really knew how serious ...
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