Assignment 3-1 Comparison of Audit Report Opinions

Assignment 3-1 Comparison of Audit Report Opinions - would...

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Question 18-22 a . As the auditor, I would issue an unqualified audit report with modified wording for the reliance on the other auditors. I wouldn’t want to take responsibility for the other auditor's work. b . As the auditor , I probably should issue a qualified audit report because management has not complied with GAAP. Auditors are not required to prepare the statement of cash flows for disclosure in the audit report. c . This approach is not in accordance with GAAP because such contingencies must be disclosed in the notes to the financial statements if the amount of the contingency cannot be reasonably estimated. A departure from GAAP such as this one requires either a qualified or an adverse opinion, depending on the materiality of the item in question. The potential settlement is likely to be very large given the proportions of the tragedy in terms of human loss and suffering. d. Because the client wouldn’t allow the confirmations to be sent, the appropriate response
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Unformatted text preview: would generally be either a qualified opinion or a disclaimer of opinion for a scope limitation imposed by the client’s management, depending on the materiality of accounts receivable e . Since I am satisfied about the inventory balance using alternative audit procedures, a standard unqualified audit report can be issued. f . Since the client failed to disclose the related-party transaction, I would probably issue a qualified or adverse audit report depending on the materiality of the matter. The client’s failure to disclose means that the financial statements do not comply with GAAP. g. Since the change in accounting principle is properly accounted for, As the auditor, I would issue an unqualified audit report with an explanatory paragraph for a lack of consistency in the application of GAAP....
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This note was uploaded on 02/29/2012 for the course ACCOUNTING 470 taught by Professor Kwong during the Spring '11 term at Franklin.

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