read the case and answer the question 5

question 1-The Overstock-Grant Thornton dispute was publicly aired via disclosure statements filed with the SEC. What impact do you believe those disclosures had on the investing public’s confidence in the financial reporting domain and the independent audit function? Were the interactions between Overstock and Grant Thornton unprofessional or otherwise inappropriate? Explain.

question2- Do you believe that the $785,000 amount at the center of the Overstock-Grant Thornton dispute was material? Defend your answer. What factors other than quantitative considerations should have been considered in deciding whether the $785,000 amount was material?

question3- Briefly compare and contrast the nature and purpose of an independent audit versus a quarterly review.

question4– The SEC requires registrants to have their quarterly financial statements reviewed by an independent accounting firm but does not mandate that a review report be included in a Form 10-Q. Under what circumstances must a review report accompany quarterly financial statements in a 10-Q? Why doesn’t the SEC routinely require public companies to include their review reports in their 10-Q filings?

question5-What is the purpose or purposes of Form 8-K filings by SEC registrants? What specific items of information must be included in an 8-K that announces a change in audit firms?

question6-Do you agree with the accounting treatment that Overstock typically applied to the revenues generated by its “Partner” line of business? Why or why not?

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