Example auditing case
1)” Based on the information given in this case and your knowledge of auditor’s reports, identify the deficiencies in the draft of the proposed report. Do not redraft the report, but provide justification or explanation for each of the deficiencies you identify” (Pany, Auditor's Report, 2010).
A. In the Introduction paragraph it states “As discussed in Note K to the financial statements, the Company has properly disclosed a subsequent event dated March 14, 20x9” (Pany, Auditor's Report, 2010). This does not belong in this section of the report; it belongs below the scope paragraph. The introduction paragraph is to “clarify the responsibilities of management and the auditors” (Pany, Professional Standards, 2010).
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Further, the company does not provide for income taxes with respect to the differences between financial income and taxable income arising because of the use, for income tax purposes, of the installment method of reporting gross profit from certain types of sales. ” (Pany, Auditor's Report, 2010). This statement belongs below the scope paragraph. This statement should also be broken down into two different notes relating to the financial statements because they refer to two different areas of the statements.
F. At the bottom of this report it states, “We believe that these appraisal values are reasonable” (Pany, Auditor's Report, 2010). This does not belong here because they do not want your opinion in this area.
2) “Explain how you would correct each of the deficiencies you identified in requirement 1” (Pany, Auditor's Report, 2010). Refer back to question 1 the errors found in the report.
A. I would omit this statement and place it below the scope paragraph of the report
B. I would omit this statement completely.
C. I would replace the statement with the following statement: Because of the effects of the matters discussed in the preceding paragraph, the financial statements referred to above are not fairly presented in all material respects
D. I would omit this statement completely.
E. These statements need to be placed below the scope paragraph and broke down into two different notes referring
) There was a lack of adequate cut-off procedures to ensure the timely recording of certain period-end accruals. This resulted in an audit adjustment of $3,578,000. The benchmark for overall materiality is $3,508,000, I would consider the audit adjustment of $3,578,000 a material misstatement. Control environment, principle 2 the board of directors and management exercise oversight of development and performance of internal controls. Due to the severity and material weakness of lack of adequate cutoff procedures to ensure timely recording of period end accruals. Management and the board of directors should evaluate performance of internal control activities including adherence to standards of conduct and expected levels of competence. In
5th Edition (2011); Armond Dalton Integrated Audit Practice Case (group mark). 15% . Attempting homework before
Financial reports consist of a statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows, notes, directors' declaration, directors' report and the auditor's report. The financial statements need to be prepared in accordance with applicable accounting standards, making the necessary disclosures in order to be transparent and fully inform readers about the activities and financial situation of the entity.
On the contrary, there were some areas of weaknesses that the tutor suggested that needed corrections such as, the content development, and the organization of the paper. For example, in the content development, he suggested to utilize more specific language
Evaluate whether the approaches identified in Section 2 above are the most effective for your organisation in the near future (3-5 years), justify any recommendations you make for a different approach (1,043 words)
iii. Weaknesses. In what ways would this plan fall short of effectively fulfilling these requirements or criteria?
Other requirements consist of (1) addressing the report to the company’s shareholders and management;(2) unifying the format of the report; (3) disclosing the independence of the auditor (4) adding a specific phrase in the required placement.
2011 Valuation Edition Yearbook.” (Exhibit VIII). We would like further clarification and documentation surrounding this number, and would like to look into other sources that may estimate small stock premiums of this size to compare the appraiser's estimates.
This report contains the supporting information to perform a full financial status review of our company, before the upcoming government contract bid. This report will cover the possible impacts that occupational fraud and abuse will have on the company, U.S. Governmental oversight of accounting fraud and abuse, and potential corruption schemes within the company.