MEDINA, Val Benedict II, G. - case analysis

MEDINA, Val Benedict II, G. - case analysis - MEDINA, Val...

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MEDINA, Val Benedict II, G. AUDITING THEORY BSA - 3 Case Analysis a. From the attorney’s deposition, these are the things that can be speculated: 1. The auditing firm did not conduct training to its auditors on leasing industry audits. This observation does not conform to what is stated in GAAS which says there should be an adequate technical training and proficiency of the auditor. Furthermore, on Raines’ testimony about the industry audit guides, it shows that he has insufficient knowledge and skill at the level required to ensure the client to receive competent professional service. An auditor should maintain professional competence by continuing awareness and an understanding of relevant technical professional and business developments. Sinclair & Lewis should have managed training on its auditors about different industries to make them more knowledgeable about the entity and to perform an audit based on developments in practice, legislation and techniques to make the service more reliable as well as the auditor’s formulated opinion. 2. The auditor considers all areas in the audit to have the same level of risk . Under the GAAS, audit work is to be adequately planned. The audit work performed by Raines is not amply prepared indicated by his statement about their regard about audit risk. Raines viewed the accounts to have the same level of risk which is not to be. If the audit work of Raines has been planned sufficiently, then it should have assessed the level of risk of each account in a way that it is not considered that every account has the same level of riskiness. Risks should be assessed under different factor affecting it and must not be viewed generally. Moreover, by this speculation, it opposes the general standard of GAAS, that is exercising due care. The
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This note was uploaded on 02/15/2012 for the course ACCOUNTANC 444 taught by Professor Cafirma during the Spring '11 term at Alabama.

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MEDINA, Val Benedict II, G. - case analysis - MEDINA, Val...

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