Case 6-31

Case 6-31 - Page1of1 Homework# 3 Strayer University Class:...

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Page  1  of  1 Homework# 3 Strayer University Class: ACC 403 Professor: Patricia Patterson McDaniel Student: Lola Imamkhanova Case 6-31: A. The bank imposed requirement of a quarterly review of the financial statements as a condition of obtaining the loan at 2 percent above prime because the bank had to have reasonable assurance that the audit of financial statements was performed by an independent auditor and bank has the expression of an opinion on the fairness with which financial statements were presented, in all material respects, financial position, results of operation, and cash flows in conformity with generally accepted accounting principles. The condition of Ritter Dairy and Fruits quarterly review was sufficient enough for the bank because Ritter Dairy and Fruits was a very new company, so there is not much to investigate, and quarterly reviews by independent CPA company was satisfying to the bank. The right to approve CPA was engaged because the bank had to have assurance that the CPA is independent. B. Since by 1996 the company had grown to six locations which included additional business partners
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