1. Research relevant databases to identify important recent developments within France‘s accounting profession, including the nation‘s independent audit function. Summarize these developments in a bullet format.
2. Societe Generale maintained that because Jerome Kerviel‘s -unauthorized activities? were initiated in 2007, the 6.4 billion euro loss that he incurred in January 2008 should be recorded in 2007. Do you agree with that reasoning? Why or why not?
3. Societe Generale was criticized for invoking what is referred to as the -true and fair override? in IFRS. Is there a comparable clause or rule in GAAP? If so, identify two scenarios under which a departure from GAAP would be necessary to prevent a set of financial statements from being misleading.
4. Compare the general format and content of the audit report shown in Exhibit 4 with the standard audit report issued under U.S. GAAS. What are the key differences between those two audit reports? Which report format is the most informative?
5. This case lists Societe Generale‘s three principal internal control objectives. Compare and contrast those objectives with the primary internal control objectives discussed in GAAS.
6. Identify countries in addition to France where joint audits are performed. What economic, political, geographic or other characteristics are common to these countries?
7. Identify audit risk factors common to a bank client. Classify these risk factors into the following categories: inherent, control, and detection. Briefly explain your classification of each risk factor that you identified.