Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN: 9781305080577
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: South-Western College Pub
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Chapter 15, Problem 50RSCQ
a.
To determine
Introduction:On site inspection, examination and verification of a process or quality system in order to ensure that all the compliance are being followed is termed as auditing. The process includes the auditing of the financial statements of the company to ensure that the statements are accurate and fairly represented.
To state:The influence of auditor’s substantial doubt about client’s ability to remain going concern will have on the format of audit.
b.
To determine
Introduction:On site inspection, examination and verification of a process or quality system in order to ensure that all the compliance are being followed is termed as auditing. The process includes the auditing of the financial statements of the company to ensure that the statements are accurate and fairly represented.
To state: The implications that the audit firm and the company will face if the audit report containsabout the substantial doubt about the company’s ability to remain as a going concern.
c.
To determine
Introduction: On site inspection, examination and verification of a process or quality system in order to ensure that all the compliance are being followed is termed as auditing. The process includes the auditing of the financial statements of the company to ensure that the statements are accurate and fairly represented.
To state:The conditions that lead to the auditors of XLL group and ML to issue different opinions.
d.
To determine
Introduction: On site inspection, examination and verification of a process or quality system in order to ensure that all the compliance are being followed is termed as auditing. The process includes the auditing of the financial statements of the company to ensure that the statements are accurate and fairly represented.
To state:The role of professional skepticism that keeps an auditor from issuing an opinion on going concern.
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In October 2020, the head office of Joey Limited was damaged by a fire. A lot of the company's accounting records were destroyed before the audit for the year ended 31 December 2020 took place, as Joey Limited has no practice of using electronic accounting records. The company's financial accountant has prepared financial statements for the year ended 31 December 2020 on the basis of estimates and the information he has been able to salvage. You have completed the audit of these financial statements.
a) Explain how your audit report would be affected by the fire at the head office of Joey Limited and the possible audit opinions in this situation.
b) Compare the responsibilities of directors and auditors regarding the published financial statement of Joey Limited.
In October 2020, the head office of Joey Limited was damaged by a fire. A lot of the company's accounting records were destroyed before the audit for the year ended 31 December 2020 took place, as Joey Limited has no practice of using electronic accounting records. The company's financial accountant has prepared financial statements for the year ended 31 December 2020 on the basis of estimates and the information he has been able to salvage. You have completed the audit of these financial statements. a) Explain how your audit report would be affected by the fire at the head office of Joey Limited and the possible audit opinions in this situation.Require:b) Compare the responsibilities of directors and auditors regarding the published financial statement of Joey Limited.
A company Hira Ltd. has been mis-reporting its financial statements since more than 10 years which none of the stakeholders noticed for years. When the situation of the Company went from bad to worse and it had no option but to declare it bankrupt, the company issued a press statement that there is disparity between actual and reported results due to accounting errors. The first question from shareholders of the Company was why the auditors had not spotted and corrected the fundamental accounting errors? The auditor of the Company, WCP partnership (one of the largest audit firm in the country), had compromised its independence by a large audit fee and also consultancy income worth several times the audit fee. Because Hira Ltd. was such an important client for WCP, it had knowingly signed off inaccurate accounts in order to protect the management of the Company. The investigation also found a number of significant internal control deficiencies including no effective management oversight…
Chapter 15 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
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