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Opening Vignette - Issue#4 ♦ There is heightened audit...

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The Audit Report was Timely But at What Cost? Chapter 3—Opening Vignette Several Important Issues Highlighted by this Story
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Issue #1 An audit needs to be completely and properly performed before issuing the audit report. There can be sever penalties, both personal and financial, that result from poor judgment on the part of the auditor.
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Issue #2 There are conflicting responsibilities in public accounting. The “partner in charge” did not conduct his review until the last day of fieldwork.
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Issue #3 There are time pressures to complete an audit by a deadline. This is especially common with SEC filings.
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Unformatted text preview: Issue #4 ♦ There is heightened audit risk. ♦ The client is “going public” which can provide management great financial reward. ♦ Audit risk is high because management is strongly motivated to overstate earnings. Issue #5 ♦ There are evidence issues involving management’s representations, representations by the client’s attorney, and the weakness of a fax confirmation. Issue #6 ♦ There is the matter of the client’s behavior and how the auditor reacts to it. ♦ A difficult aspect of auditing or any other business is how to deal with negative or threatening behavior....
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