1. Exhibits 1 and 4 present DHB’s original 2003-2004 balance sheets and income statements and the restated balance sheets and income statements for those two years, respectively. Review the original and restated financial statements for 2004 and identify the “material” differences between them. Defend your choices.
2. Identify the fraud risk factors posed by DHB for its independent auditors. Which of these factors, in your opinion, should have been of primary concern to those auditors?
3.Compare and contrast the internal control reporting responsibilities of the management and independent auditors of public companies.
4.Does the SEC have a responsibility to protect the investing public from self-interested corporate executives? Do professional auditing standards or other rules or regulations impose such as responsibility on independent auditors?