Determine if there is actually an illegal act

Info icon This preview shows pages 2–5. Sign up to view the full content.

View Full Document Right Arrow Icon
determine if there is actually an illegal act Coaching tip: If the auditor believes an illegal act may have occurred, they can (1) inquire one level ABOVE the place where they believe the act occurred, (2) gather more evidence about the act and (3) consult with legal counsel about the legality. 10. The most widely used profitability ratio is: quick ratio profit margin return on assets **earnings per share Coaching tip: This one is up for debate. EPS is used widely by financial statement users. Internally, however, ROA is more widely used.
Image of page 2

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
11. Which is a liquidity activity ratio?
 Profit margin (Profitability ratio) ** Inventory turnover (activity ratio) Return on assets (profitability ratio) Times interest earned (solvency ratio) 1. Match the following definitions to the terms. __C__ Standards of Fieldwork __A__ General Standards __B__ Standards of Reporting a. Due Professional Care b. Adequacy of informative disclosuresc. c.Sufficient understanding of internal control 2. The following is a portion of a qualified scope and opinion report due to a scope restriction. (Note: A separate report was issued on the effectiveness of internal control over financial reporting.) Independent Auditor's Report To the shareholders of Fast Times Corporation, We have audited the accompanying balance sheet of Fast Times Corporation as of September 30, 2009, and the related statements of income, retained earnings, and cash flows for the past year. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit. Except as discussed in the following paragraph, we conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. We were unable to obtain audited financial statements supporting the company's investment in a foreign affiliate stated at $1,040,000, or its equity in earnings of that affiliate of $501,000, which is included in net income, as described in Note 14 to the financial statements. Because of the nature of the company's records, we were unable to satisfy ourselves as to the carrying value of the investment or the equity in its earnings by means of other auditing procedures. Required: Complete the above report by preparing the opinion paragraph. Opinion paragraph: In our opinion, except for the effects of such adjustments, if any, as might have been determined to be needed had we been able to obtain information supporting the
Image of page 3
investment in the foreign affiliate mentioned above, the financial statement present fairly, in all material respects, the financial position of the company as of September 30, 2009, and the results of its operations and cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.
Image of page 4

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern