Chap002_Solutions - Chapter 02 The Financial Statement Auditing Environment CHAPTER 2 THE FINANCIAL STATEMENT AUDITING ENVIRONMENT Solutions to

Chap002_Solutions - Chapter 02 The Financial Statement...

This preview shows page 1 - 2 out of 2 pages.

Chapter 02 - The Financial Statement Auditing Environment 2-1 CHAPTER 2 THE FINANCIAL STATEMENT AUDITING ENVIRONMENT Solutions to Discussion Cases 2-27 Merry-Go-Round Part I. a. E&Y is alleged to have violated all three general standards as well as one, and perhaps two, of the standards of fieldwork. They violated the first general standard in the sense that it appeared that the staff assigned to the engagement did not have sufficient training or experience for the engagement. E&Y’s relationship with MGR’s landlords and attorneys likely caused them to violate the second general standard, which requires independence in mental attitude. The turnaround team’s slow performance, the fact that the leader of the team took a vacation at a critical time, and the insufficient cost-cutting recommendations suggest that E&Y did not exercise due professional care, which would be in violation of the third general standard. Poor staff assignments, the leader’s vacation, and the use of inexperienced personnel all suggest that the engagement was not adequately planned and that assistants were not properly supervised, a violation of the first standard of fieldwork.
Image of page 1
Image of page 2

You've reached the end of your free preview.

Want to read both pages?

  • Fall '08
  • Staff
  • U.S. Securities and Exchange Commission, financial statement auditing, Statement Auditing Environment, general standard

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture