Task: Use the "Financial Reporting Problems at Molex" (Harvard Business School, no. 9-105-082) case by Paul Healy for the following questions.
Q1. Why does Molex have to hire an external auditor?
Q2. What was the financial reporting problem at Molex? How would the correction of the problem be recorded in Molex's financial statements?
Q3. What factors do you think influenced management's decision not to raise the issue with the auditors?
Q4. Why were Molex's auditors so concerned about the reporting problem at Molex? If you were a member of the board, would you agree with their concerns?
Q5. As a member of Molex's board, what would you do to respond to the auditor's request that the CFO (and possibly the CEO) be replaced?