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Article AnalysisAccording to the GAAP rules of accounting, the description of an ‘audit failure’ can assume various perspectives. As stated in this case study, misstated financial statements are good example that provides an indication for an audit failure. Secondly, an audit failure can be represented by lack of properly documented work papers in a business enterprise. This implies although the right procedures and judgment were utilized, an audit failure may be reported due to inadequacy in the documentation.

Thus, some of the concerns stipulated by Jay Hanson in the case study are relevant. This is because Hanson’s allegations are aimed to dispute the term ‘audit failure’, which is a term that covers a relatively broad segment of a business firm. According to Hanson, the term ‘audit failure’ as utilized by PCOAB forms a basis for confusion to several stakeholders of a firm such as the audit committee, investors, etc. In my opinion, while this rationale is true, Jay Hanson and his supporters should not focus on altering the term rather focus should be reinforced in educating the stakeholders on what ‘audit failure’ means. Focus should also be augmented in providing specific details on the ‘audit failures’ as reported by PCOAB.

The reason for suggesting that focus should be altered from changing the term to educating stakeholders is because changing these terms increases the venue for fraudulent activities to occur. The aggravating realities of compromising on audit reports particularly on its procedures, terminologies, etc. can be demonstrated by the consequence of Enron Corporation case study. This article is relevant as it identifies accounting issues that face the business operations of the modern world. It also supports the use of GAAP rules as well as other accounting rules through the use of PCOAB inspections.