Connect Access Card for Principles of Auditing & Other Assurance Services
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 16, Problem 37EOQ

The search for unrecorded liabilities for a public company includes procedures usually performed through the:

  1. (1) Day the audit report is issued.
  2. (2) End of the client’s year.
  3. (3) Date of the auditors’ report.
  4. (4) Date the report is filed with the SEC.
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Consider the annual report of commonwealth bank or any company (most companies make their annual reports available on the company's website) and find the disclosures explaining the amounts paid to auditors. How much was the auditor paid for the audit, non-assurance, or other services?
Suppose an auditor has been paid $1,000,000 each year for the past several years by a company to perform the audit of its annual financial statements. This company is the auditor’s largest client. In the current year, the auditor notices that the preliminary income statement excludes certain expenses that typically are shown. When asked, management tells the auditor that these expenses do not reflect the company’s true performance, so they will not be shown in this year’s income statement. Plus, management informs the auditor that it will be paying $1,200,000 for this year’s audit, and management commits to using the auditor for at least five more years. Required: 1. Understand the reporting effect: Does the audit arrangement described above have the potential to jeopardize the auditor’s opinion of management’s decision not to report certain expenses? 2. Specify the options: Are auditors employees of the company who must accept requests of management? 3. Identify the impact: Do…
Required: For each of the following independent scenarios a) Indicate the type of auditor’s report to be issued. Include the type of opinion and any other modifications. b) Justify your conclusion by describing the conditions and nature of the issue that is affecting the type of the audit report to be issued   Scenario 1 Skyway Hardware and Electronic Inc. (SHEI), a publicly listed entity, has a material unsecured loan receivable balance owing from Parts Supply Ltd. (PSL).  SHEI has an October 31st year end. PSL declared bankruptcy on November 28, 2021.  The auditors completed their field work for the audit of SHEI on December 12th and it is the auditors’ judgement that the loan receivable is impaired and should be written down.  Management of SHEI disagree with this assessment and have refused to write-off the debt. SHEI is otherwise a profitable entity and the future outlook for the company is positive as it has recently secured 4 new customers. Indicate the type of audit…

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Connect Access Card for Principles of Auditing & Other Assurance Services

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