Cendant Corporation

Cendant partnership 1 (a) Related parties make decisions based on information provided through financial statements. It is the tenders responsibility to plan and get along audit engagement to offer liable assurance that the financial statements are counterbalance and fair. (b) The two main categories of travesty that demand financial reporting include misstatements arising from dishonorable financial reporting and misstatements arising from misappropriation of assets. c) Factors that attendants should consider when assessing the likelihood of hearty misstatements receivable to fraud include whether or not the company has a spring to make something seem consistent (rationalization), whether or not the company or individuals bring an incentive or pressure on them, and whether or not the company has the prospect to commit fraud. (d) Many factors existed during the 1995 to 1997 audits of CUC that created an environment semiconductive for fraud. For example, CUCs top guidan ce was pugnacious to increase their market share due to the pressure put on them to satisfy analyst expectations.CUC had been committing the same type of fraud for many years before 1995, so it was rational for them to maintain their consistency. One somebody even stated that he position he was only doing his job. The adjustments that were made at the end of each year brought well-nigh the opportunity for CUC to also commit fraud. 3 (a) In the Cendant fraud management turn back occurred when the CUC management recognized deferred receipts as revenue immediately, or delaying recognition of membership cancelations. (b) To except address the risk of management override of inner(a) controls attenders must remain unbelieving that management override exists.Auditors should also conk acquainted(predicate) with the company and its internal controls upon acceptance. 5 (a) A company may compulsion to hire a member of its foreign audit team because the auditor is familiar with the company, or management has developed a strong working relationship with the auditor from working on the audit together. (b) If the client has hired former auditors it might reach the independence of the existing external auditors in fact and appearance. Current auditors may desire on the representation made by former co-workers.