L20 Notes_Part_19 - e A modified unqualified report with a...

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Chapter 15 - P5: Audit Reports c. In performing the audit, you do not believe you had adequate access to important records on their cash wire transfer activity. c. A scope-limitation qualified report with an explanatory paragraph that would basically state as follows: We were unable to obtain sufficient evidence to satisfy ourselves as to the balance sheet value for the cash account . In addition, the scope and opinion paragraph will reference the new paragraph. d. Management no longer estimates its uncollectible receivables each fiscal year end, preferring instead the direct write-off method. They argue that it is not material. You believe otherwise. d. A qualified report with an explanatory paragraph as follows: The company uses the "direct write-off" method to account for bad debt although, in our opinion, they should estimate bad debt at the end of each accounting
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Chapter 15 - P5: Audit Reports e. A material portion of the work on the audit of the inventory value was performed by another audit firm (whose work you believe you can trust).
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Unformatted text preview: e. A modified, unqualified report with a reference in the introduction to the specific area audited by the other firm with quantitative data on its relationship to total assets and/or total income. It will also be necessary to refer to the work of the other auditors in the scope and opinion paragraph. f. In the second year of your audit relationship, the client has decided to disclose an ongoing contingent liability in its financial statements for the first time. Their failing to do so last year caused you to issue a qualified audit report. f. An unqualified report with an explanatory paragraph changing the prior period's audit opinion (assuming management restates the prior period's financial statements for comparative purposes): The results of prior periods have been restated to reflect an estimate of the contingent liability (as seen in footnote _) in accordance with accounting for contingencies. As a result, we remove our qualification of ____'s financial statements....
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