Freescale Semiconductors, Inc. Advanced Auditing December 9, 2014 Threat of prison terms deter executives Wide range in sentencing Longer prison terms No perfect answer Additional laws and harsher penalties on financial fraud can eliminate or mitigate financial fraud. Does the threat of prison terms deter executives from committing wide-scale financial frauds? In my opinion, yes and no. An executive engaging in accounting fraud is typically not planning on getting caught. Therefore, stricter sentencing guidelines wouldn’t seem to have much of an impact on an executive’s thought as to not commit fraud. If an executive isn’t planning on getting caught, a potential prison term of 10 years versus five years is no different. If the goal of sentencing is really punishment over deterrence, the longer prison sentences are meeting that goal. Society needs protection from these criminal minds who cause widespread financial damage to so many. No perfect answer exists when it comes to white-collar crimes and prison sentences. The system is still evolving and will likely continue to do so for a long time to come. What is important to recognize is that white-collar crimes can have many victims and can cause widespread damage. For that, stiff sentences to punish and possibly deter the fraud perpetrators are necessary, and lawmakers should work to make those sentences fair and equitable. 2 SOX protection Sentencing guidelines have changed dramatically Is there still fairness Powerful deterrent Additional laws and harsher penalties on financial fraud can eliminate or mitigate financial fraud, continued Since the corporate scandals the SOX Act of 2002 sought to protect retail investors from financial statement fraud. Sentencing guidelines have changed dramatically because of Sarbanes-Oxley. For example, wire and mail fraud previously carried maximum five-year sentences, and that was increased to 20 years under the legislation. The increase in the length of sentences for white-collar crimes now puts many of these crimes ahead of crimes such as drug trafficking and manslaughter. Some question the fairness of this. While financial crimes can cost millions or billions of dollars, to some it still seems irrational to make those prison sentences harsher than the sentences for violent crimes. Others recognize the widespread financial devastation even one white-collar crime can cause, and hope that lengthy sentences will serve as a powerful deterrent. 3 Shallow sentencing should be examined closer Limited resources tendency to focus on violent crimes Direct involvement cooperation lighter sentencing The publicity of fraud Additional laws and harsher penalties on financial fraud can eliminate or mitigate financial fraud, continued The fact remains that shallow sentencing should be examined closer. Lawmakers, judges, and prosecutors owe it to consumer and victims to work toward a system that is fair and equitable ...

1. Freescale Semiconductors, Inc.
Advanced Auditing
December 9, 2014
Threat of prison terms deter executives
Wide range in sentencing
Longer prison terms
No perfect answer
Additional laws and harsher penalties on financial fraud can
eliminate or mitigate financial fraud.
Does the threat of prison terms deter executives from

2. committing wide-scale financial frauds? In my opinion, yes and
no.
An executive engaging in accounting fraud is typically not
planning on getting caught. Therefore, stricter sentencing
guidelines wouldn’t seem to have much of an impact on an
executive’s thought as to not commit fraud. If an executive isn’t
planning on getting caught, a potential prison term of 10 years
versus five years is no different.
If the goal of sentencing is really punishment over deterrence,
the longer prison sentences are meeting that goal. Society needs
protection from these criminal minds who cause widespread
financial damage to so many.
No perfect answer exists when it comes to white-collar crimes
and prison sentences. The system is still evolving and will
likely continue to do so for a long time to come. What is
important to recognize is that white-collar crimes can have
many victims and can cause widespread damage. For that, stiff
sentences to punish and possibly deter the fraud perpetrators are
necessary, and lawmakers should work to make those sentences
fair and equitable.
2
SOX protection
Sentencing guidelines have changed dramatically
Is there still fairness
Powerful deterrent
Additional laws and harsher penalties on financial fraud can

3. eliminate or mitigate financial fraud, continued
Since the corporate scandals the SOX Act of 2002 sought to
protect retail investors from financial statement fraud.
Sentencing guidelines have changed dramatically because of
Sarbanes-Oxley. For example, wire and mail fraud previously
carried maximum five-year sentences, and that was increased to
20 years under the legislation.
The increase in the length of sentences for white-collar crimes
now puts many of these crimes ahead of crimes such as drug
trafficking and manslaughter. Some question the fairness of
this. While financial crimes can cost millions or billions of
dollars, to some it still seems irrational to make those prison
sentences harsher than the sentences for violent crimes. Others
recognize the widespread financial devastation even one white-
collar crime can cause, and hope that lengthy sentences will
serve as a powerful deterrent.
3
Shallow sentencing should be examined closer
Limited resources tendency to focus on violent crimes
Direct involvement cooperation lighter sentencing
The publicity of fraud

4. Additional laws and harsher penalties on financial fraud can
eliminate or mitigate financial fraud, continued
The fact remains that shallow sentencing should be examined
closer. Lawmakers, judges, and prosecutors owe it to consumer
and victims to work toward a system that is fair and equitable to
all parties.
Although cases of corporate fraud and embezzlement have
received a greater share of media coverage in the last five to
seven years, only a fraction of all cases are actually
investigated by law enforcement. With limited resources and a
tendency to focus on violent crimes, white collar criminals are
usually only prosecuted criminally for their deeds if the crimes
are large enough to warrant scrutiny by law enforcement.
Often, executives who do not have significant direct
involvement in the financial crimes receive lighter sentences.
Those who choose to cooperate with prosecutors and testify
against other defendants also tend to receive lighter sentences.
In general, sentences for financial crimes are much longer and
harsher today than they were in the 1980s and 1990s.
Part of the change in sentencing has to do with the publicity of
fraud cases and the victims of fraud. In earlier years,
stockholders and corporate victims were largely nameless and
faceless to the general public. But as more ordinary consumers
become involved in the stock market through their retirement
accounts, they see a personal connection to fraud.
Investors are now real people, just like them.
4
Create an insider trading policy

5. Take extra precautions
Put top officers on automatic
Have an internal watchdog
Suggest new strategies that government can implement to
eliminate or mitigate insider trading.
Create an insider trading policy
Translate the country’s criminal and securities laws on insider
trading into clearly defined rules your officers and employees
must follow. Be sure to specify blackout dates and spell out the
meaning of insider and insider information.
Take extra precautions
For instance, go above and beyond what the law requires by
asking senior officers to notify your CFO or legal department
before they exercise their stock options.
Put top officers on automatic
To address the tight trading restrictions put on CEOs and other
top officers, companies should consider automatic share plans
that allow trades on a pre-arranged schedule.
Have an internal watchdog
Assign someone to monitor trades of the company’s stock. It’s
also a good idea to form an investigations group that can look
into suspicious trading activities.
Have a third party, such as an accounting firm, come in at the
end of the year to verify insiders’ holdings against their

6. reported trades throughout the year.
5
Insider trading is bad for everyone
investors
businesses
the country
Determine the key internal controls needed over the
communication of confidential information to outside parties,
and analyze the manner in which these controls act as a
deterrent to fraudulent activities.
Insider trading is bad for everyone – investors, businesses, and
the country. From a company’s perspective, the business
suffers in the sense that people lose respect for their
management team, and the company starts losing its investors.
This in turn affects the country as a whole. Internal controls
need to implement to protect confidential information to outside
parties.
6
Insider Trading Policy
Definition of an insider
Black out Periods
Top official Trading times

7. Determine the key internal controls needed over the
communication of confidential information to outside parties,
and analyze the manner in which these controls act as a
deterrent to fraudulent activities, continued
Insider Trading Policy
It makes for good business companies to take their own steps to
restrict illegal insider trading. It doesn’t cost much to have an
insider trading policy in place – although monitoring
compliance to the policy can get expensive – and the benefits
are likely to outweigh the costs. A company that voluntarily
restricts insider trading would be less likely to come under
regulatory oversight and would not suffer the impact that a
public enforcement would have.
Definition of an insider
An insider trading policy needs to clearly spell out the
definition of an “insider” and “insider information.
Black Out Periods
It should also specify blackout periods when insiders are not
allowed to buy or sell stock. A number of market observers
have pointed to consistent patterns of trading spikes in the days
before an announcement of earnings or a significant business
development, such as a merger.
Top Official Trading Times
Top officers should notify the company’s chief financial officer
or legal department before making a trade.
Automatic share plans for their senior officers allow top leaders
such as CEOs to sell their shares according to a pre-arranged

8. schedule. The concept is that you take away the discretion to
trade from the insider, and the trading decision has nothing to
do with the insider and is not necessarily dependent on any
event.
Automatic share plans also make it easier for senior officers to
exercise their stock options. Without such a plan, CEOs and
other top officers typically have very limited periods during the
year when they can trade; in addition to the usual blackout
periods, they're also prohibited from trading during times when
they possess non-public material information which, in the case
of a CEO, is quite often. There are so few times during the year
when CEOs can trade. Automatic share plans address this
challenge and help companies avoid the perception of
questionable trades.
7
External Parties; watchdog
Review Analysts reports
Third Party Verification
Determine the key internal controls needed over the
communication of confidential information to outside parties,
and analyze the manner in which these controls act as a
deterrent to fraudulent activities, continued
External Parties; watchdog
To minimize their risk for insider trading, companies need to

9. keep a close eye on external parties such as advisers and
consultants. An internal watchdog is a good idea, recommending
at least one employee to monitor the company’s stock trades.
Review Analysts reports
Companies should also take the time to carefully review
analysts’ reports for possible information leaks. Be careful that
they're not putting out ‘buy, buy, buy’ recommendations to help
underwriters sell your company’s stock.
Third Party Verification
While internal monitoring is critical, it’s also important to have
third-party verification. An accountant or auditor should check
insiders’ holdings at the end of the year and compare these to
transactions they reported throughout the year.
The idea that illegal insider trading can be eliminated any effort
can go a long way.
8
Report the crime to the SEC
Well-thought out manner
With corroborating documents, materials
And a list of potential witnesses
Propose an alternative plan to act on leaked information.
Recommend one strategy to communicate the alternative plan
and determine who should communicate this plan.

10. Donna Murdoch could have come forward and reported the
crime to the Securities and Exchange Commission. It is critical
that information provided to the SEC is complete and appears
reliable.
A whistleblower’s information should be presented to the SEC
in a thorough,
well-thought out manner,
with corroborating documents, materials,
and a list of potential witnesses
9
Under the Dodd-Frank Act
Independent knowledge or analysis
Original Source of information
Not made from an allegation
Propose an alternative plan to act on leaked information.
Recommend one strategy to communicate the alternative plan
and determine who should communicate this plan, continued

11. You are not expected to have all the relevant documentation,
but should have original information that is not known to the
government. Original Information as described under the Dodd-
Frank Act should be:
“Derived from the independent knowledge or analysis of a
whistleblower.”
“Not known to the SEC other than by the whistleblower as the
original source of information.”
“Not exclusively derived from an allegation made in a judicial
or administrative hearing, audit, or investigation, or from the
news media, unless a whistleblower is the source of the
information.”
10
Contact and Attorney
Anonymously report the information
Identity is protected
Case presented in best possible light
Propose an alternative plan to act on leaked information.
Recommend one strategy to communicate the alternative plan
and determine who should communicate this plan, continued

12. Insider trading carries severe civil and criminal penalties.
Donna Murdoch should contact an attorney before speaking to
the regulators.
You can anonymously report the information to the SEC if you
are represented by a lawyer. Working with an experienced
whistleblower attorney will ensure that your identity is
protected until payment of the award. It will also ensure that
your case is presented in the best possible light that the SEC
would deem actionable. If you do not want to remain
anonymous you do not need to be represented by a lawyer.
Anonymously report the information
Identity is protected
Case presented in best possible light
11
Compare and contrast the different auditor’s responsibilities
between audit and consulting engagements.
CONSULTING ENGAGEMENTS
AUDIT ENGAGEMENTS
Coach
Achieve a quality system
Meeting Goals
Examiner
Examines the system in place
Provide Oversight

13. Coach - Examiner
Consultants help and advise. Good consultants are similar to
trainers and coaches. Where a consultant is like a coach, the
auditor is the examiner.
Achieve a quality system – Examines the system in place
Consultants work with you to help you understand what is
required and do what is necessary for your quality system to
reach the required level. They help you get your system ready.
Advise you where you have gaps, explain and show you how to
fix the gaps, or even do it for you. They advise, teach, guide
and help you throughout the process. Prepare you and show you
how to meet the various requirements.
An Auditor is someone with the skills and experience to audit
the quality of the management system. They decide if the
system meets all the requirements of the relevant standards.
Meeting Goals - Provide Oversight
“Owners and managers need the ability to review financial
statements and reports to determine if the business is meeting
financial goals. Consulting firms analyzes current and prior
financial statements to determine not only if finances are in
order, but also if the proper reports are being generated.
Auditors review cash management procedures, accounting
policies and controls, trial balance accounts and relationships
with creditors. If necessary, the auditing firm can provide
oversight with capital restructuring or with the complete
overhaul or upgrade of the internal accounting system.”
(Phillips, 2014)
12
Compare and contrast the different auditor’s responsibilities
between audit and consulting engagements, continued
CONSULTING ENGAGEMENTS

14. AUDIT ENGAGEMENTS
Risk Management
Fraud
Poor management
Financial Loopholes
Security breaches
Risk Management
Fraud
Poor management
Financial Loopholes
Security breaches
“A manager or hands-on owner can become so ingrained in the
daily operations that he loses sight of the bigger picture. He
may be bogged down with details that blind him to obvious
pitfalls that need attention. An analysis of the company's
accounting system detects possible loopholes that are ripe for
fraud by employees. After identifying all possible risks
associated with the business, the auditing firm can design plans
to shore up the systems and instill tighter security.” (Phillips,
2014)

15. Consulting services provide risk management guidance in areas
of fraud, poor management, financial loopholes and security
breaches.
Audit services detect problem areas of the company's
accounting system where possible loopholes for fraud, poor
management, financial loopholes and security breaches, can be
identified as well.
13
Theory of prohibition
Investors need to be aware
Who is the judge
Increase or decrease in corporate fraud
Take a position on whether more legislative and/or regulatory
agency oversight will increase or decrease corporate fraud.
The theory of prohibition
The theory behind the prohibition on insider trading is that it
undermines investor confidence in the fairness and integrity of
the securities markets.
Investors need to be aware
All investors must be aware of the potential danger in trading

16. on a "tip" from someone who knows non-public information
regarding a security.
Who is the judge
Self-regulation should be the starting point for a decrease in
corporate fraud. Companies across the spectrum should put in
place insider trading regulations.
Increase or decrease in corporate fraud
When self-regulation has failed I do believe more strict
legislation and regulatory agencies should be involved. Only
then will there be a consequence stiff enough for prevention of
acting on a “tip”.
14
References
DMC-Admin. (2007, 12 17). Crime and punishment: Sentencing
in financial fraud cases. Retrieved 12 7, 2014, from
Wisconsin Law Journal Web Site:
http://wislawjournal.com/2007/12/17/crime- and-punishment-
sentencing-in-financial-fraud-cases/
John, M. (2012, 6 11). How to prevent insider trading in your
ranks . Retrieved 12 7, 2014, from The Glode and Mail Web
Site: http://www.theglobeandmail.com/report-on-
business/careers/business-education/how-to-prevent-
insider- trading-in-your-ranks/article4239232/
Phillips, C. (2014). The Three Types of Consulting Services
That Audit Firms Have Provided to Their Audit Clients.
Retrieved 12 13, 2014, from Small Business:Chron:
http://smallbusiness.chron.com/three-types-consulting-
services-audit-firms-provided-audit-clients-35708.html
Whistleblowers Today. (2014). How to Report a Fraud to the
Sec. Retrieved 12 10, 2014, from Whistleblowes Today Web
site: http://www.whistleblowerstoday.com/do-you-qualify/how-
to- report-a-fraud-to-the-sec

17. 15
CASE STUDY - Freescale Semiconductor, Inc,
Who will guard the guardians? - Juvenal
During the summer of 2006, a syndicate of investors led by The
Blackstone Group, one of Wall Street's largest private equity
investment firms, initiated a secret plan to acquire Freescale
Semiconductor. Based in Austin, Texas, Freescale is among the
world's largest producers of semiconductors and for decades
was a subsidiary of Motorola, Inc., the large electronics
company. In July 2004, Motorola spun off Freescale in one of
that year's largest initial public offerings.
Blackstone retained Ernst & Young (E&Y) to serve as a
consultant for the planned buyout of Freescale. Among other
services, Blackstone wanted E&Y to review Freescale's human
resource functions and to make recommendations on how to
stream- line and strengthen those functions following the
acquisition. James Gansman, a partner in E&Y's Transaction
Advisory Services (TAS) division, was responsible for
overseeing that facet of the engagement.
Similar to the other Big Four accounting firms, E&Y became
involved in the investment banking industry during the 1990s.
In fact, by the late 1990s, the small fraternity of accounting
firms could boast of having two of the largest investment
banking practices in the world, at least in terms of the annual

18. number of consulting engagements involving merger and
acquisition (M&A) deals. In 1998, KPMG consulted on 430
M&A transactions, exactly one more than the number of such
engagements that year for PricewaterhouseCoopers (PwC).
Despite those impressive numbers, KPMG and PwC had not
established themselves as dominant firms in the investment
banking industry. In 1998, the total dollar volume of the M&A
engagements on which KPMG and PwC consulted was $1.65
billion and $1.24 billion, respectively. Those numbers paled in
comparison to the annual dollar value of M&A transactions for
industry giants such as Goldman Sachs, which was involved in
M&A deals valued collectively at nearly $400 billion in 1998.
At the time, Goldman Sachs, Lehman Brothers, Morgan Stanley,
and the other major investment banking firms consulted
exclusively on "mega" or multibillion-dollar M&A
engagements. By contrast, the "low end" of the M&A market in
which the Big Four firms competed-typically involved
transactions measured in a few million dollars.
E&Y's involvement in the huge Freescale M&A deal was a
major coup for the Big Four firm. When the transaction was
consummated in December 2006, the price paid for the company
by the investment syndicate led by The Blackstone Group
approached $18 billion. That price tag made it the largest
private takeover of a tech- nology company to that point in time
as well as one of the ten largest corporate takeovers in U.S.
history.
Not surprisingly, Blackstone demanded strict confidentiality
from E&Y and the other financial services firms that it retained
to be involved in the planned acquisi lion of Freescale. James
Gansman, for example, was told that Blackstone wanted the
transaction to be "super confidential" and was instructed in an
internal E&Y e-mail to "not breathe the name of the target
[Freescale] outside of the [engagement] team.''1

19. During June and July 2006 while he was working on the
Freescale engagement, Gansman passed "inside information
about the pending transaction"2 to Donna Murdoch, a close
friend who worked in the investment banking industry. An FBI
investigation revealed that Gansman and Murdoch
"communicated over 400 times via telephone and text
messages"3 in the weeks leading up to the September 11, 2006,
announcement that the Blackstone investment syndicate
intended to acquire Freescale. In that time span, Murdoch
purchased hundreds of Freescale stock options, which she
cashed in on September 11-12, 2006, realizing a windfall profit
of $158,000.
The FBI also determined that between May 2006 and December
2007 Gansman provided Murdoch with information regarding
six other M&A transactions on which E&Y consulted. In total,
Murdoch used that inside information to earn nearly $350,000 in
the stock market. Murdoch gave that information to three other
individuals, including her father, who also used it to produce
significant stock market profits.
Published reports indicate that Murdoch became involved in the
insider trading scheme to help make the large monthly payments
on a $1.45 million subprime mortgage on her home. The funds
she initially used to "play the market" were provided to her by
one of the individuals to whom she disclosed the inside in-
formation given to her by James Gansman. In addition,
Gansman at one point loaned her $25,000.
The Securities and Exchange Commission (SEC) uses
sophisticated software programs to detect suspicious trading
activity in securities listed on stock exchanges. In early 2007,
the SEC placed Murdoch on its "watch list" of individuals
potentially involved in insider trading and began scrutinizing

20. her stock market transactions. Information collected by the SEC
resulted in criminal charges being filed against Murdoch. ln
December 2008, she pleaded guilty to 15 counts of securities
fraud and two (2) related charges.
In May 2009, Murdoch served as one of the prosecution's
principal witnesses against Gansman in a criminal trial held in a
New York federal court. During the trial, Gansman testified that
he had been unaware that Murdoch was acting on the
information he had supplied her. Defense counsel also pointed
out that Gansman had not personally profited from any of the
inside information that he had been privy to during his tenure
with E&Y. Nevertheless, the federal jury convicted Gansman of
six counts of securities fraud. A federal judge later sentenced
him to a prison term of one (1) year and one (1) day.
EPILOGUE
In October 2007, the surging stock market produced an all-time
high of 14,164.53 for the Dow Jones Industrial Average. One
year later, stock prices began plummeting in the lace of an
economic crisis triggered by the collapsing housing and
subprime mortgage markets in the United States. The frenzied
stock market over this time frame produced a record number of
insider trading cases as unprincipled investors either attempted
to make a "fast buck" when stock prices were trending ever
higher or attempted to mitigate their losses when stock prices
began nosediving.
Personnel at all levels of the Big Four accounting firms
routinely gain access to highly confidential inside information,
information that can be used to gain an unfair advantage over
other stock market investors. Unfortunately for the accounting
profession, James Gansman is not the only partner or employee
of one of those firms who has been implicated recently in a
major insider trading scandal.

21. In January 2008, the SEC charged two former PwC employees
with using confidential client information to earn large profits
in the stock market. One of the individuals was on PwC's audit
staff, while the other was assigned to PwC's Transaction
Services group, the PwC division comparable to E&Y's TAS
department.4 The individual in the Transactions Services group
accessed the confidential information while working on several
M&A consulting engagements for PwC. He then provided that
information to his friend on PwC's audit staff, who relied on it
to purchase securities of companies that were acquisition
targets. This latter individual's name was recognized by a PwC
audit partner when he was reviewing a list of securities
transactions for a client that another company was attempting to
acquire. The audit partner informed the SEC, which then filed
insider trading charges against the two friends.
In November 2010, the U.S. Department of Justice filed insider
trading charges against a former Deloitte tax partner and his
wife, who had also been employed by that firm.5 The couple
allegedly obtained confidential information regarding seven
Deloitte clients that were involved in M&A transactions.
According to the SEC, the couple communicated that
information to family members living in Europe who then
engaged in securities involving the companies that were parties
to those transactions. The SEC reported that the former Deloitte
partner and his wife netted more than $3 million in stock market
gains between 2006 and 2008 from the insider trading scheme,
while their British relatives netted more than $20 million in
profits.6 In investigating this case, the Justice Department and
SEC sought and received the cooperation of the Financial
Services Authority, the British agency charged with regulating
Great Britain's securities markets.
To date, the most publicized case of insider trading directly
linked to the accounting profession involved Thomas Flanagan,

22. a former vice chairman of Deloitte who spent 38 years with that
firm. In October 2008, Deloitte announced that it was suing
Flanagan for allegedly trading in the securities of at least
twelve (12) Deloitte audit clients for which he had served as an
"advisory"' partner.
Deloitte claims that Flanagan held and traded securities of his
own clients for the past three (3) years. The firm alleges he
bought one of his client's stock one (1) week before it
announced an acquisition of a public company. He is also
accused of violating the firm's independence and conflict-of-
interest policies and hiding his personal securities holdings
from Deloitte. In his role as an advisory partner, he attended the
audit committee meetings of seven (7) of the twelve (12)
clients affected.8 Press reports indicated that the clients linked
to the allegations surrounding Flanagan included Allstate, Best
Buy, Motorola, Sears, and Walgreens.
In August 2010, the SEC announced that it had settled insider
trading charges that it had filed against Flanagan. The terms of
the settlement required Flanagan to pay more than $1 million in
fines and penalties. Flanagan consented to the settlement
without admitting or denying the SEC's allegations. Flanagan's
son, who had allegedly made securities trades based upon inside
information given to him by his father, reached a similar
settlement with the SEC and paid fines and penalties of
approximately $120,000. Other litigation cases linked to
Flanagan's alleged indiscretions are still ongoing, including the
lawsuit that Deloitte filed against him.
1 U.S. Department of Justice, "Former Ernst & Young Partner
and Investment Banker Charged in Insider Trading Scheme," 29
May 2008, (http://newyork.fbi.gov).
2 Ibid.

23. 3 Ibid.
4 Rappeport, "Ex-PwC Pals were Inside Traders, SEC Says,"
CFO.com, 15 January 2009.
5 P. Lattman, "Couple Accused of Trading Insider Tips," The
New York Times (online), 30 November 2010.
6 E. Stevens, "Pacific Heights Socialites Charged in Elaborate
Insider-Trading Scheme," Bay Citizen (online), 09 January
2010.
7 A Deloitte "advisory" partner is typically a senior audit
partner who has significant industry expertise relevant to a
given client. ln addition to consulting with members of an audit
engagement team on important issues arising during an audit, an
advisory partner typically reviews the audit work papers before
the engagement is completed.
8 S. Johnson, "Deloitte Insider Case Sparked Doubts about
Audits," CFO.com, 10 November 2008.
Assignment 3_Freescale Semiconductors, Inc.
Due: February 18, 2018
Review the Freescale Semiconductor case - attached.
Prepare a twelve to twenty (12-20) slide PowerPoint
presentation with speaker notes in which you:
1. Give your opinion as to whether or not additional laws and
harsher penalties on financial fraud can eliminate or mitigate
financial fraud. Support the rationale.
2. Suggest three (3) new strategies that you believe the
government can implement to eliminate or mitigate insider
trading. Provide a rationale to support the suggestion.
3. In this case study, leaked merger and acquisition information
was used to enable the fraud. Determine the key internal

24. controls needed over the communication of confidential
information to outside parties, and analyze the manner in which
these controls act as a deterrent to fraudulent activities.
4. Pretend you are Donna Murdoch in this case study and
propose an alternative plan to act on the leaked information.
Next, recommend one (1) strategy to communicate the
alternative plan and determine whom the plan should be
communicated with. Justify the response.
5. In this case study, E & Y was providing a consulting service
to The Blackstone Group related to its planned acquisition of
Freescale Semiconductor. Compare and contrast the different
auditor’s professional responsibilities between consulting
engagements and audit engagements.
6. Take a position on whether more legislative and / or
regulatory agency oversight will increase or decrease corporate
fraud. Provide a rationale to support the position.
7. Use at least three (3) quality academic resources in this
assignment.
NOTE: Wikipedia and similar type Websites do not qualify as
academic resources.
Your assignment must follow these formatting requirements:
· Apply APA standards to citation of sources
· No more than four (4) bullets per slide
· No more than six (6) words per bullet
· Headings - Times New Roman Font - 36 Points
· Bullets - Times New Roman Font - 24 Points
· Add bulleted speakers notes
· Include a cover page containing the title of the assignment, the
student’s name, the professor’s name, the course title, and the

25. date.
The specific course learning outcomes associated with this
assignment are:
· Examine the various types of financial fraud and the auditor’s
responsibilities related to fraud detection.
· Evaluate the legal environment for liability related to financial
audits and the proactive activities that a professional may take
to prevent litigation.
· Use technology and information resources to research issues in
auditing
· Write clearly and concisely about auditing using proper
writing mechanics