Description: It’s a tad more than your average traffic ticket. Automakers Hyundai and Kia (which are both controlled by Hyundai) paid $100 million in fines for over-stating gas mileage figures on automobile window stickers. The overstatements were detected by the US Environmental Protection Agency in its audits of audit company test results. In addition to the fines, Hyundai and Kia must also spend an estimated $50 million to set up additional audit practices over future testing results.
Source: Globe and Mail.com
Date: November 3, 2014
Points for Discussion:
1) As an accouuntant, what account would you recommend these fines be charged to?
2) If you were asked to set up additional audit practices to provide assurance on Kia and Hyundai’s fuel economy testing, what audit procedures would you recommend?
3) What audit risks might be associated with an audit assignment on fuel economy testing?