4551 summer 2011 Assignment #5- Question

4551 summer 2011 Assignment #5- Question - competitor in...

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Hand In Assignment #5 For each of the following independent situations identify the type of audit opinion(s) to be issued, give your reason(s) and in each situation describe any changes necessary to the standard audit report. State your assumptions and consider in your response all possible alternatives. File 1: Audit field staff was unable to observe a material amount of inventory at a client’s Thunder Bay location because the client claimed that the inventory was buried in snow. While you failed to obtain additional satisfactory evidence regarding the inventory existence, you do not feel that this lack of audit evidence prevents an audit opinion on the client’s financial statement taken as a whole. File 2: During the review of a client’s legal records, a member of the audit team noted correspondence relating to a potential lawsuit against the company by a
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Unformatted text preview: competitor in western Canada. After some discussion with your clients controller, the company agreed to add a note to the financial statements that outlines the nature of the contingency. Your legal letter to the clients solicitor concluded that the occurrence of the confirming future event is likely but the amount of the loss cannot be reasonably estimated. File 3: A member of the audit team noted that a lease for a vehicle was recorded as a capital lease when in fact it was an operating capital lease. Your staff member noted the unadjusted error and concluded the effect on a number of accounts was material. The client refused to record the lease as an operating lease and to make any adjustments. File 4 Jazz Company, a large public company, has agreed to disclose segmented information in its financial statements. _...
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