Parmalat Case Answers Essay

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Parmalat Finanziaria, S.p.A. Case
Brief Summary:

Case Questions:
1). Identify key factors or circumstances that complicate an independent audit of a multinational company
One thing to always keep in mind is that the culture is different across the globe. Auditors of multinational companies may face cultural and communication barriers with their clients, which can complicate audit tasks. We also have to account for different currency across different countries and any transactions involving them. One has to closely monitor the exchange rates to avoid overstating or undermining revenue. We also have to consider different accounting and financial reporting treatments for the same transactions and accounts. Auditor’s role is to ensure that …show more content…
If the plaintiff’s legal counsel is able to construct a “one-firm” argument such as this, there is no reason why a firm’s global network should not be held both joint and severely liable.
6). Cultural norms and nuances affect the operations of large companies worldwide. Identify examples of distinctive cultural norms and nuances specific to three countries. Explain how these cultural traits likely impact the independent auditors of companies in each of those countries.
The strong importance on the family unit in Italy explains why family-controlled businesses have controlled Italy’s economy for centuries. The idea that family comes before anything else in Italy played a major role in the makeup of the Parmalat fraud. Most of the executives of Parmalat were either extended family members of Calisto Tanzi, CEO and founder of the company, or very close friends, like CFO Fausto Tonna. The company’s board of directors alone was consisted of Tanzi’s son, Stefano, a brother of Tanzi, and his nephew. The fact that all these members of management had such a close relationship made it much easier for them to be on the same page in terms acting fraudulently went constructing the financial statements. As
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