Connect Access Card for Principles of Auditing & Other Assurance Services
21st Edition
ISBN: 9781260299366
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
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Chapter 13, Problem 30QRA
To determine
Explain the audit issues and steps to resolve the issues in the given case.
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You are auditing the financial statements of Austin Software Company, which is a fast-growing software development company. As part of the company’s strategy, management has been aggressively pursuing acquisitions of other companies. Some of the prior acquisitions resulted in the recording of goodwill. During your review of income and expense accounts, you noted a material goodwill impairment charge associated with the company’s acquisition of Longhorn Software, Inc.
Required
As part of your audit, consider each of the following:
What are the underlying accounting standards requirements that are relevant to your evaluation of the company’s charge for the impairment of goodwill?
What types of evidence would be relevant to your evaluation of whether management’s impairment charge is fairly stated?
How might the use of a business valuation specialist be helpful in this year’s audit?
You are auditing the financial statements of Austin SoftwareCompany, which is a fast-growing software development company. As part of the company’sstrategy, management has been aggressively pursuing acquisitions of other companies.Some of the prior acquisitions resulted in the recording of goodwill. During your reviewof income and expense accounts, you noted a material goodwill impairment chargeassociated with the company’s acquisition of Longhorn Software, Inc.As part of your audit, consider each of the following:a. What are the underlying accounting standards requirements that are relevant toyour evaluation of the company’s charge for the impairment of goodwill?b. What types of evidence would be relevant to your evaluation of whether management’s impairment charge is fairly stated?c. How might the use of a business valuation specialist be helpful in this year’s audit?
You are the lead partner overseeing the audit for Camo Ltd, a privately owned company.
The completion of the audit report is pending for the income year 2020 and you have noted several situations with possible actions.
The situations are as follows:
1. Camo Corporation carries its property, plant, and equipment accounts at current market values. Current market values exceed historical cost by a highly material amount, and the effects are pervasive throughout the financial statements.
2. Management of Camo Corporation refuses to allow you to observe, or make, any counts of inventory. The recorded book value of inventory is highly material.
3. You were unable to confirm accounts receivable with Camo’s customers. However, because of detailed sales and cash receipts records, you were able to perform reliable alternative audit procedures.
4. One week before the end of fieldwork, you discover that the audit manager on the Camo engagement owns a material amount of Camo’s common stock.
5.…
Chapter 13 Solutions
Connect Access Card for Principles of Auditing & Other Assurance Services
Ch. 13 - Prob. 1RQCh. 13 - K-J Corporation has current assets of 5 million...Ch. 13 - Prob. 3RQCh. 13 - Prob. 4RQCh. 13 - Explain the use of a system of authorizations for...Ch. 13 - Moultrie Company discovered recently that a number...Ch. 13 - Does a failure to record the retirement of...Ch. 13 - Prob. 8RQCh. 13 - Prob. 9RQCh. 13 - Prob. 10RQ
Ch. 13 - Prob. 11RQCh. 13 - Prob. 12RQCh. 13 - Prob. 13RQCh. 13 - Prob. 14RQCh. 13 - Prob. 15RQCh. 13 - Gibson Manufacturing Company acquired new factory...Ch. 13 - Prob. 17RQCh. 13 - Do the auditors question the service lives adopted...Ch. 13 - Prob. 19RQCh. 13 - Explain how the existence of lease agreements may...Ch. 13 - Prob. 21RQCh. 13 - Prob. 22QRACh. 13 - Prob. 23QRACh. 13 - Gruen Corporation is a large diversified company...Ch. 13 - Prob. 25QRACh. 13 - Prob. 26QRACh. 13 - Prob. 27QRACh. 13 - Prob. 28QRACh. 13 - Prob. 29QRACh. 13 - Prob. 30QRACh. 13 - Prob. 31QRACh. 13 - To assure accountability for fixed-asset...Ch. 13 - Prob. 32BOQCh. 13 - Which of the following is an internal control...Ch. 13 - Which of the following accounts should be reviewed...Ch. 13 - Prob. 32EOQCh. 13 - Prob. 32FOQCh. 13 - Which of the following statements is not typical...Ch. 13 - Prob. 32HOQCh. 13 - Prob. 32IOQCh. 13 - An effective procedure for identifying unrecorded...Ch. 13 - Which of the following is not an overall test of...Ch. 13 - Prob. 32LOQCh. 13 - Prob. 33OQCh. 13 - Analysis of which account is least likely to...Ch. 13 - Prob. 34BOQCh. 13 - Prob. 34COQCh. 13 - Prob. 34DOQCh. 13 - A search for overstated property, plant, and...Ch. 13 - The following are typical questions that might...Ch. 13 - Prob. 36PCh. 13 - Prob. 37PCh. 13 - Chem-Lite, Inc., maintains its accounts on the...Ch. 13 - Prob. 39PCh. 13 - You are reviewing the property, plant, and...
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