Essay on Interim Financial Information

1815 Words8 Pages
Questions:

1. Is David Robinson suggested compromise appropriate? Why or why not?

2. Do you believe that Zachariah Crabtree is a person of integrity? What about David Robinson? Defend both of your answers. Does Robinson have an impropriate relationship with Crabtree? Explain.

3. Identify the primary audit objectives for client’s year-end discretionary expense accruals. Is it permissible for companies to overstate period-ending expense accruals to make their financial statements more “conservative”?

4. Discuss the scope and nature of an auditor’s responsibilities during a review of client’s quarterly financial statements.

Answers:

1.
The American Institute of Certified Public Accountants is a
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Also Robinson is not a person of integrity. In his audit he violated SAS No.1 as well as AU sec110, AU Sec. 220 and AU Sec 230. AU 110 states that the objective of the audit of financial statements by the independent auditor is the expression of an opinion on the fairness with which they present, in all material respects, financial position, results of operations, and its cash flows in conformity with generally accepted accounting principles. Roberson did accept “precise point estimates” that results in material misstatements of company financial reporting. Moreover, the AU section 220 states that the auditor must maintain independence in all matters relating to the audit. Robinson and Crabtree were close friends. In addition Robinson violated Due Professional Care, AU section 230. He forgot that the professional skepticism exist by allowing “precise point estimates” of accruals which provides a base for manipulation of financial statements. Moreover, the ET Section 102-2 states that a conflict of interest may occur if a member performs a professional service for a client or employer and the member has a relationship with another person, entity, or service that could impair the member’s objectivity. Thus, David’s integrity and independence can be questioned because he is trying to please Hansen to make partner.
I think both Robinson and Crabtree have an impropriate relationship. Those both characteristics represent lack of integrity. Their actions, in my
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