Texts and examples - Other fraud: loopholes, overstatements of revenue, understatement of expense, off- the- balance- sheet operations etc. (your knowledge). - Relationship problems between auditors and company executives, cite the text. - Negotiation problems around adjustments which have significant impacts on the financial statements (the text and your knowledge). Conclusion: renewing auditors may be a solution. * Another plan Could include other solutions to reduce accounting fraud: - Conducting internal audits regularly. - Mixing the audit teams, with two separate teams conducting the same audit (for large firms). - Using technological solutions: it is possible nowadays to review all details of all accounting transactions and detect fraud fast. Consulting companies could produce public reports on those reviews. - Reenforcing executives' accountability. * Possible questions Review what the candidate did not mention and other solutions to reduce accounting fraud? Recall: - The use of the financial statements. - More detail on the audit process. - The Enron scandal, the Big5 reduced to the Big4. - SOX legislation. 358