Brodnax Minerals Company: A Case Study on Auditors' Responsibilities

Abstract

Brodnax is a comprehensive auditing case involving litigation between external auditors and shareholders who lost billions of dollars as a result of a massive fraud. Students are required to discuss several important topics covered in most external auditing courses: the objectives and limitations of an audit, issues involving client acceptance and risk to the auditing firm, the rendering of appropriate audit opinions, and the auditors' responsibilities for the detection of fraud. The objective of the case is to provide students with an opportunity to see the importance for practicing auditors to consider the legal ramifications of performing their jobs in light of the litigious environment in which auditors work.