Question

In your opinion, did the apparent mistakes made by the PwC auditors in auditing Take-Two's receivables and reserve for sales returns involve "negligence" on their part? Would you characterize the mistakes or errors as "reckless" or "fraudulent"? Justify your answers.

Answer 1

Yes, they do. I would assume that the mistakes were of fraudulent nature.

Step-by-step explanation:

P W C's overlook of 104$ of accounts receivable by Take Two is an act of negligence as it was the most important asset of this company. The same can be said for reserve for sales returns as the main auditor didn't compare five main product sales with invoices after the end of the year. Four sales with very high returns were in fact fraudulent parking transactions. The mistakes can be seen as fraudulent as Fish failed to practice due professional care and obtain sufficient evidence that could justify Take Two's domestic accounts receivable balance.