Question

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. (Please don't over explain, simple responses are easier to understand.)

Answer 1

• Based on Overstock's financial success, it is clear that the trading price was effected by these disclosures.
• Investors and users of financial information believe that the independent auditors will present financial statements in a fair manner.
• This has increased audit and management responsibilities and puts responsibility on partners and auditors to fairly present financial statements.
• Grant Thornton acted inappropriately due to their inconsistent application of $785,000 A/R/Gain Contingency.
• Grant Thornton initially did not suggest adjusting entry, hence Overstock issued their 10-k with $785,000 Gain Contingency.