L20 Notes_Part_20 - to the financial statements is...

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Chapter 15 - P5: Audit Reports g. A material portion of the audit work was performed by a firm whose work you cannot obtain and whose partners are unwilling to discuss your client. g. Although shared engagements are not uncommon, a situation such as this is a scope limitation and will demand a qualified report similar to the one referenced in c above. h. Your client is currently subject to material legal claims under strict consumer product liability law. h. The existence of significant uncertainties may justify issuing an unqualified opinion with an emphasis of a matter explanatory paragraph (although a standard, unqualified opinion is allowable).
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Chapter 15 - P5: Audit Reports i. You are convinced that your client’s business will not likely survive for another year. i. An unqualified opinion with a going-concern explanatory paragraph and a note
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Unformatted text preview: to the financial statements is warranted. The explanatory paragraph should describe specific reasons causing uncertainties about the company’s ability to continue as a going concern. j. Due to substantial difficulty in estimating its uncollectible accounts and given the relatively small amount of receivables on your client’s financial statements, you concur with their use of the direct write-off method for accounting for bad debt. j. An approved departure from GAAP calls for an unqualified report with an explanatory paragraph that discusses the inherent difficulties of the estimate, the auditor's concurrence with the departure and the effect of the departure on the appropriate accounts. Note that in this case, an estimate of the effect of the departure is not, by definition, possible. Also note that this situation is extremely rare....
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This note was uploaded on 10/05/2011 for the course ACG 5637 taught by Professor Monikacaushoulli during the Fall '08 term at University of Florida.

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L20 Notes_Part_20 - to the financial statements is...

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