Auditing: Financial Audit and Auditors Reports Date

1266 Words6 Pages
PRINCIPLES OF AUDITING Course: Auditing Title: Auditing Operations and Completing the Audit, Auditors’ Reports Date: March 25, 2014 Justin Kealey, CPA, is auditing Tustin Companies, Inc. Kealey has accumulated known and likely misstatements for the current year to evaluate whether there is a sufficiently low risk of material misstatement of the financial statements to issue an opinion. However, Kealey notes that there are several misstatements that have been carried over from prior years. A .Distinguish between the iron curtain and the rollover approaches to considering the misstatements from prior years. In consideration of an auditor’s approach for considering the effects of misstatements from…show more content…
a. Discuss types of information that may indicate substantial doubt about a client’s ability to remain a going concern. Circumstances presenting doubt in the client’s ability to achieve and maintain business performance begin with working capital deficiencies. More problems for concern may be recurring operating lost, arrears in dividend, defaulting on loans and adverse financial ratios. The economy can cause business lost as loosing principal customers, work stoppages, legal problems, and inside staff members affecting the business meeting its standards. b. Explain the auditors’ obligation in such situations. Information contradictory to an assumption that a CPA firm’s client remains a growing concern is generally relates to the company’s ability to satisfy its financial commitments For each of the following brief scenarios, assume that you are reporting on a client’s financial statements. Reply as to the type(s) of opinion possible for the scenario. In addition: Unless stated otherwise, assume the matter involved is material. Thomas Bros. Construction is involved in a hazardous trade on a work project and has obtained insurance coverage related to the hazard. Although the probability is remote, a material portion of the company’s assets could be destroyed by a serious work related accident. A standard unqualified report is issued. If
Get Access