final. case[2825].pdf

1. PWC was finally held negligent by the Federal Deposit Insurance Corporation (FDIC), which is regulator of banks in the United States (Johnson, 2019). As a result, it was asked to pay fine of $ 335 million towards damages levied on the auditing firm due to its negligence in carrying out the audit of Colonial Bank and failure to follow professional standards and inability to identify fraud scheme between the Colonial Bank and Taylor, Bean and Whitaker (Johnson, 2019).
2. The rules of code of conduct in the AICPA code that were violated by PWC are:
Principle of Due Care- PWC had not designed its audit in such a way that fraud can be detected. As per the AICPA code of conduct, it is the responsibility of the auditor to plan their audit in such a way that they are able to get reasonable assurance that there are no major misstatements in the financial statements audited by them.
Principle of Skepticism- Auditors are required to have a questioning mind and critically evaluate all the audit evidence gathered by them but PWC failed to notice the warning signs in audit of Colonial Bank
3. The main PCAOB standards that were violated by PWC while carrying out its audit of Colonial Bank was PCAOB Auditing Standard 110.02 which provides that it is the duty of the auditors to plan his audit properly and obtain a high...