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Unformatted text preview: 1-13a.The following parts of the definition of auditing are related to the narrative:(1)Virms is being asked to issue a report about qualitative and quantitative information relating to trucks. The trucks are therefore the quantifiable information with which the auditor is concerned.(2)There are three criteria which must be evaluated and reported by Virms: Existence of the trucks on the night of June 30, physical condition of each truck, and fair market value of each truck.(3)Susan Virms will accumulateand evaluatefour basic types of evidence:Count the trucksto determine their existence.Use registration documentsheld by Charon for comparison to the serial number on each truck to determine ownership.Examine the trucksto determine each truck’s physical condition.Examine the current blue bookto determine the fair market value of each truck.(4)Susan Virms, public accountant, appears qualified as a competent, independent person. She is a public accountant, and she spends most of her time auditing used automobile and truck dealerships and has extensive specialized knowledge about used trucks that is consistent with the nature of the engagement.(5)The report resultsare to include:which of the 20 trucks are parked in Regional’s parking lot the night of June 30the condition of each truck, using established guidelinesthe fair market value of each truck using the current blue book for trucksb.The only parts of the audit which will be difficult for Virms are:Evaluating the condition, using the guidelines of poor, good, and excellent. It is highly subjective to do so. If she uses a different criterion than the blue book, the fair market value will not be meaningful. Her experience will be essential in using this guideline....
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- Spring '12
- Financial audit, Truck, Automobile