Chpt 2, 3, 17 examples solutions

Chpt 2, 3, 17 examples solutions - 2-32 SOLUTION: Clinton...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chpt 2, 3, 17 examples solutions Answers page 1 of 6 2-32 SOLUTION: Clinton Company Generally Accepted Auditing Standards Jones's Actions Resulting in Failure to Comply With Generally Accepted Auditing Standards General Standards (1) The auditor must have adequate technical training and proficiency to perform the audit. It was inappropriate for Jones to hire the two students to conduct the audit. The audit must be conducted by persons with proper education and experience in the field of auditing. Although a junior assistant has not completed his formal education, he or she may help in the conduct of the audit as long as there is proper supervision and review. (2) The auditor must maintain an independence in mental attitude in all matters relating to the audit. Because of the financial interest in whether the bank loan is granted, Jones is not independent. (3) The auditor must exercise due professional care in the performance of the audit and the preparation of the report. Jones did not review the work or the judgments of the assistants and clearly failed to adhere to this standard. Standards of Field Work (1) The auditor must adequately plan the work and must properly supervise any assistants. Jones accepted the engagement without considering the availability of competent staff. Jones failed to supervise the assistants and did not adequately plan the work. (2) The auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to the assess risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures. Jones and the assistants did not obtain the require understanding of the entity and its environment, including internal control. (3) The auditor must obtain sufficient appropriate audit evidence by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit. Jones acquired no evidence that would support the financial statements. Merely checking the mathematical accuracy of the records and summarizing the accounts is inadequate.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Chpt 2, 3, 17 examples solutions Answers page 2 of 6 Standards of Reporting (1) The auditor must state in the auditor’s report whether the financial statements are presented in accordance with generally accepted accounting principles. Jones's report makes no reference to GAAP. Because Jones did not conduct a proper audit, the report should state that no opinion can be expressed. (2) The auditor must identify in the auditor’s report those circumstances in which such principles have not been consistently observed in the current period in relation to the preceding period. Does not appear to have been violated.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/17/2011 for the course ACCT 4620 taught by Professor Any during the Spring '11 term at University of Colorado Denver.

Page1 / 6

Chpt 2, 3, 17 examples solutions - 2-32 SOLUTION: Clinton...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online