Explain what are the main procedures you would have to perform to place reliance on the work of the prior auditors, i.e. in this case the opening balances?
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(b) You are the audit partner in Jason & Associates. Jason & Associates have accepted a recent engagement for a retail company called, Food Co-op. You have obtained the Annual Financial Statements of Food Co-op and studied the opening balances. As part of the audit plan you have decided to place reliance on the work of the prior auditors. Explain what are the main procedures you would have to perform to place reliance on the work of the prior auditors, i.e. in this case the opening balances?
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- sSaleha was recently hired by the accounting firm of Haron & Associates. After two weeks of joining the firm, Saleha was sent to the first-year staff training course.The instructor asked her to prepare answers for the following questions:a. How does evidence relate to assertions and to the audit report?b. What are the characteristics of evidence should an auditor be concerned with when searching for and evaluating evidence? c.List and explain the objective and benefits of financial statement audit.Feller, the sole owner of a small hardware business, has been told that the business should have its financial statements audited by an independent CPA. Feller, having some bookkeeping experience, has personally prepared the company’s financial statements and does not understand why such statements should be audited by a CPA. Feller discussed the matter with Farber, a CPA, and asked Farber to explain why an audit is considered important. a. Describe the objectives of an independent audit b. Identify five ways in which an independent audit may be beneficial to FellerFor each of the following situations involving relations between auditors and the companies they audit, indicate whether it violates IFAC’s Code of Ethics for Professional Accountants and the rationale for the applicable guideline. a) Paul Asante, CPA, discloses confidential information in a peer review of the firm’s quality control procedures. b) Frank Smith, CPA, is auditing a company in Ghana, which has offered to send him and his wife on a holiday in Hawaii for two weeks. c) Tabula Gonzales, CPA, says in an interview in the local paper that Emilio Rios, CPA, misleads his clients about the quality of his audit work. Additional information: Please add references or citations.
- For each of the following situations involving relations between auditors and the companies they audit, indicate whether it violates IFACs Code of Ethics for Professional Accountants and the rationale for the applicable guideline. a.Paul Asante, CPA, discloses confidential information in a peer review of the firms quality control procedures. b.Frank Smith, CPA, is auditing a company in Ghana, which has offered to send him and his wife on a holiday in Hawaii for two weeks. b.Tabula Gonzales, CPA, says in an interview in the local paper that Emilio Rios, CPA, misleads his clients about the quality of his audit work.Susan, CA, a practicing chartered accountant has been appointed as an internal auditor of Syarikat Maju Berhad. She conducted the physical verification of the inventory at the year-end and handed over the report of such verification to Muaz, CA, the statutory auditor of the Company, for his view and reporting Can Muaz CA, rely on such report?You have accepted the engagement of auditing the financial statements of the C. Reis Company, a small manufacturing firm that has been your client for several years. Because you were busy writing the report for another engagement, you sent a staff accountant to begin the audit with the suggestion that she start with accounts receivable. Using the prior year’s audit documentation as a guide, she prepared a trial balance of the accounts, aged them, prepared and mailed positive confirmation requests, examined underlying support for charges and credits, and performed other work she considered necessary to obtain evidence about the validity and collectability of the receivables. At the conclusion of her work, you reviewed the audit documentation she prepared and found she had carefully followed the prior year’s audit documentation.Required:The opinion rendered by auditors states that the audit was made in accordance with generally accepted auditing standards. Identify the important…
- For each of the following situations involving relations between auditors and the companies they audit, indicate whether it violates IFAC’s Code of Ethics for Professional Accountants and the rationale for the applicable guideline. Paul Asante, CPA, discloses confidential information in a peer review of the firm’s quality control procedures. Frank Smith, CPA, is auditing a company in Ghana, which has offered to send him and his wife on a holiday in Hawaii for two weeks. Tabula Gonzales, CPA, says in an interview in the local paper that Emilio Rios, CPA, misleads his clients about the quality of his audit work.You are the audit engagement partner and you noted the following during the review of the audit files of your clients: For each situation, describe with reason(s) the form of audit report that you should issue. (i)The audit team for 1st client could not observe the inventory count that was held at the year-end since the firm’s appointment as auditors was made after the company’s year-end and no alternative procedures could be used to confirm the inventory balance. (ii)Your 2nd client is currently building a distribution centre using its own employees on its own premises. In total, the company recorded a net profit of RM 40 million. The cost of direct labour amounted to RM 4 million, based on the cost records kept. This direct labour cost was included in the distribution center's cost. However, it is discovered that the direct labour costs are not supported as the related costing record have been accidentally destroyed. The collapse of many public companies in the last few years has…For each of the following situations involving relations between auditors and the companies they audit, indicate whether it violates IFAC's Code of Ethics for professional accountants and the rationale for the application guideline. Asante, CPA, discloses confidential information in a peer review of the firms quality control procedures. Frank Smith, CPA, is auditing a company in Ghana, which has offered to send him and his wife on a holiday in Hawaii for two weeks. Tabula Gonzales, CPA, says in an interview in the local paper that Emilio Rios, CPA, misleads his clients about the quality of his audit work.
- Assume that you are an audit senior in charge of planning the audit of an entity that your firm has audited for the previous four years. During the audit planning meeting with the manager and partner in charge of the engagement, the partner noted that the entity recently adopted an IT-based accounting system to replace its manual system. The manager and partner have limited experience with IT-based accounting systems and are relying on you to help them understand the audit implications of the entity's change. Consequently, they have askd you to respond to a few concerns regarding automated accounting systems. Required: a. In previous years, the audit firm has relied heavily on substantive procedures as a source of audit evidence for this entity. Given that the entity now has changed its accounting system, what are some of the factors that should consider when deciding whether to move to a reliance strategy? b. Under what conditions should the audit firm consider engaging an IT…Assume that you are an audit senior in charge of planning the audit of an entity that your firm has audited for the previous four years. During the audit planning meeting with the manager and partner in charge of the engagement, the partner noted that the entity recently adopted an IT-based accounting system to replace its manual system. The manager and partner have limited experience with IT-based accounting systems and are relying on you to help them understand the audit implications of the entity's change. Consequently, they have askd you to respond to a few concerns regarding automated accounting systems. a. In previous years, the audit firm has relied heavily on substantive procedures as a source of audit evidence for this entity. Given that the entity now has changed its accounting system, what are some of the factors that should consider when deciding whether to move to a reliance strategy? b. Under what conditions should the audit firm consider engaging an IT specialist to…You are the training manager at Guava & Co., Chartered Accountants. Some trainees in the firm have requested you to clarify the following issues: a) Can the auditor discard any audit document, forming part of his opinion, after the issuance of the auditor’s report? b) The changes that can be incorporated during the final the assembly process citing three such examples. c) The circumstances under which it becomes necessary to modify the existing audit documents or add new audit documents after the issuance of the auditor’s report and the matters that should be documented in such a situation. Required: Offer appropriate explanations for each of the above issues.
