Auditing and Accounting Cases: Investigating Issues of Fraud and Professional Ethics 3rd Edition by Jay Thibodeau,Deborah Freier

Exercise 3

Explain what is meant by an auditor's proposed adjusting journal entries (PAJEs). Do you believe that Andersen's final decision regarding the PAJE's was appropriate under the circumstances? Would your opinion change if you knew that all of the adjustments were based on subjective differences (such as a difference in the estimate of the allowance for doubtful accounts) as compared to objective differences (such as a difference in the account receivable balance of their biggest customer)?