Practice Problems Ch. 3 (ACCT-422)

Practice Problems Ch. 3 (ACCT-422) - Solutions to Chapter 3...

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Solutions to Chapter 3 Practice Problems 3-23 a. (2) b. (3) c. (3) 3-24 a. (3) b. (4) c. (1) 3-25 a. (2) b. (3) c. (3) 3-28 (a) CONDITION (b) MATERIALITY LEVEL (c) TYPE OF REPORT COMMENTS 1. Scope of the audit has been restricted Highly material Disclaimer Because the client refuses to allow the auditor to expand the scope of his audit, a disclaimer of opinion is appropriate rather than a qualified as to scope and opinion. 2. Failure to follow GAAP Highly material or material. We need additional information regarding the auditor's preliminary judgment about materiality Adverse (if highly material) or Qualified (if material) The materiality of twenty percent of net earnings before taxes would be sufficient for many auditors to require an adverse opinion. That materiality question is a matter of auditor judgment. 3. Lack of independence Not applicable Disclaimer Lack of independence by audit personnel on the engagement mandates a disclaimer for lack of independence. 4 None Not applicable Unqualified The company has made a decision to follow a different financing method, which is adequately disclosed. There is no change of accounting principle. 5. Scope of the audit Highly material Disclaimer The auditor cannot issue an unqualified opinion on
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has been restricted the income statement or the statement of cash
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This note was uploaded on 04/11/2010 for the course ACCT 422 taught by Professor Blake during the Spring '10 term at MD University College.

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Practice Problems Ch. 3 (ACCT-422) - Solutions to Chapter 3...

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