Eyemax Corporation: Evalution of Audit Differences

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Completing the audit, Reporting to Management, and External Reporting C A S eS INC LU De D IN T h IS Se CTION 12 369 379 385 391 395 12.1 EyeMax Corporation 12.2 Auto Parts, Inc. 12.3 K&K, Inc. . . . . . . . . . . . . . . . . . . . . . . . Evaluation of Audit Differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . Considering Materiality When Evaluating Accounting Policies and Footnote Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Leveraging Audit Findings to Provide Value-Added Insights . . . . . . . . . . . . . . . . . . . . . . 12.4 Surfer Dude Duds, Inc. Considering the Going-Concern Assumption . . . . . . . . . . . . . . . . . 12.5 Murchison Technologies, Inc.…show more content…
We recommend using it to apply concepts covered in the “Completing the Audit” chapter/ module. The case is designed to illustrate the issues surrounding end-of-audit adjustments. The case is also designed to reinforce student’s understanding of tolerable misstatement, materiality, and audit sampling. In our experience, even though students have a basic understanding of materiality, many of them have difficulty not requiring the client to adjust for proposed audit adjustments related to misstatements in the financial statements. In particular students have difficulty not requiring adjustment when misstatements are due to the misapplication of GAAP. The case requires students to decide which of the individual adjustments to make and in what amount. Some students select proposed adjustments that are less subjective while others simply select one of the largest misstatements to correct. These differences lead to good class discussions about the differences in “hard” and “soft” proposed adjustments. The students do not have the case extension or follow-up assignment in their casebook. We have used the case as both an in-class and out-of-class exercise where students complete the original case individually. Before

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