Tyco is a conglomerate organization that had $36 billion inrevenue. In a court trial, it was alleged that the CEO of the organization used corporate funds:
-For a private birthday party (over 1 million)
-To lavishly furnish an apartment in New York City
-To pay domestic help for taking care of the apartment
-To make loans to key executives that were subsequentlyforgiven by the CFO
1. What audit procedures would have identified thesetransactions
2. Is is reasonable to expect an audit to uncover these typesof transactions in a #36 billion company
3. Should the auditor look for these types of transactions in every audit? Is it reasonable for auditors to look for such transactions?
4. What controls should an organization like Tyco implement toensure that such transactions do not take place in the future?