{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Chpt 2, 3, 17 examples solutions

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

Info icon This 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.
Image of page 1

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

View Full Document Right 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.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern