Assignment

Case Dell Inc.

Questions

I. Define the phrase "earnings management" Under what conditions, if any, is earnings management acceptable? Do auditors responsibilities include actively searching for Instances of earnings management by clients? Defend your answers.

2. Dell recorded the exclusivity payments as an offset or reduction to its operating expenses. What 'management assertion" did that accounting treatment violate? What audit procedure or procedures might have resulted in the discovery of that accounting treatment?

3. During the time frame that Intel was making exclusivity payments to Dell, Dell's business model was being adversely affected by the increasingly competitive nature of the PC industry. What responsibility, if any, do auditors have to analyze a client's business model? Do auditors have a responsibility to track and analyze key developments in a client's industry? Defend your answers.

4. What ethical Issues do exclusivity agreements such as that between Dell and Intel raise? Are there analogous ethical issues faced by audit firms and their clients? Explain.

Attachment:- Audit-Assignment.rar