ACCT402 Auditing, Dr. Fatima Alali Research and Wharton Database Writing Assignment Due Per syllabus, and at the beginning of class 10 points The purpose of this research paper is to access the SEC website to locate Litigation Releases and Press Releases. You are also required to download data from the Wharton Database to investigate the relationship between fraudulent and bad news releases about a public company and its stock prices. This assignment is graded for content, correct use of English language and grammar. You are highly encouraged to use the writing centers offered by the University and Mihaylo College before submitting your assignment. The answer to the questions should be organized in the following sections: Title Your name Bally Fitness Litigation Release Summary Bally Fitness Press Release Summary Analysis of Bally’s daily stock prices from January 1997-December 2009 Your answers must not exceed five double spaced pages in 12 point font, including the stock price chart. You must be precise and to the point. The Securities and Exchange Commission found Bally Total Fitness Holding Corporation, a nationwide commercial operator of fitness centers, fraudulently accounted for three types of revenues it received from its members. The SEC also charged the audit firm and six partners for their roles in the accounting violations. Visit the SEC website (sec.gov) and search the link to “Litigation Releases” to locate Litigation Release 20470 issued on February 28, 2008, against Bally Total Fitness to learn more about this revenue fraud. Required: a. Read the release and the accompanying compliant in this matter and briefly summarize the types of alleged frauds. For each fraud, identify the management assertion(s)/or the audit objective(s) that was violated. b. Return to the opening page on the SEC website and search the link for “ press Releases” to locate the December 17, 2009, announcement of the SEC charges against the audit firm and the six partners. Summarize the SEC charges against the audit partners. c. Read the press release and briefly summarize the SEC description for the nature of risks associated with the Bally’s audit engagement. d. To access data from the Wharton Database and be able to interpret them, please use the following credential to access the data. Please read and comply with user’s agreement. Data is for education use only. https://wrds-web.wharton.upenn.edu/wrds/index.cfm? Username: audit402 Password: F18acct2238! Please follow the next steps in order to download the daily stock prices for Bally Total Fitness over the period January 1997- December 2009: Steps to get stock price data for Bally: 1. After logging with class username and password, accept the agreement, and go to: 2. Center for Research Securities Prices (CRSP) 3. Click on: Stock/Security Files 4. Click on Daily Stock file 5. Enter the time from Jan 1, 1997-Dec 31, 2009 6. Make sure the Ticker is selected 7. Look at -Please enter Company codes separated by a space and type in the space: BFIT BFT 8. Scroll down to select price (if you like, you can select anything else that interests you too, e.g. name of company, exchange, de-listing..etc). 9. Scroll some more and select type of file, I usually use .csv but .xlxs is fine as well. Just don’t use text file. You know, it is easier to work on the data in Excel. 10. Click Query Submit. It is going to open up in a new window. Just wait for it until it finishes running. Last, right click on the file to save it into your computer. You should have the data file on your computer now. Now, please use charts in excel to make a line chart of the stock prices. Observe the ups and downs in stock prices. Do you think stock prices responds to bad news I the market about Bally, i.e. around same days fraud or action was initiated against Bally and EY partners? Please make sure to explain your findings and also please explain lack of stock prices for the entire period.
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