Please use the AICPA professional standards to answer each of the following questions. Please cite the section of
the professional standards where you found your answer. You may not cite other sources:
1- What topic does AU-C section 610.13-610.14 address?
2- You are the partner on the audit of Eagle Manufacturing Inc. (EMI), a non- public entity, you issued an unmodified opinion on the financial statements for the year-ended December 31,2018 on February 15, 2019. Subsequent to the issuance of your opinion (in July 2019), the company's internal audit department discovered that EMI had a very large error in the inventory account in the 2018 financial statements, which they indicated was due to human error. You did not discover this misstatement during your audit, and you are concerned that this may be a material misstatement. What are your responsibilities as an auditor?
3- You have a non-public client, Tri-City Recycling Inc., that is having financial difficulties. You are getting ready to begin the audit for the year ended June 30, 2019, but they have not paid their fees that were billed over the past 18 months. You believe their business is likely to improve, and you are willing to do their audit and to give them a bit longer to pay. However, do the unpaid fees make any other problems that would prevent you from doing the June 30, 2019 audit? (use the AICPA code of professional conduct (ET) to answer this question.)
4- You were recently reading an article in the journal of Accountancy about audits of group financial statements, and the article keeps referring to the 'component auditor.' You want to know what this term means so you start searching the professional standards. What is formal definition of this term? (use the clarified auditing standard (AU-C) to find your answer.)
5- Smith Brothers Distributing, Inc., a private company, requested that your firm perform a review of their financial statements. You agreed to perform the engagement, but now you have substantial doubt about their ability to continue as a going concern for a reasonable period of time. What are your responsibilities related to this issue when doing a review? (use the Accounting and Review Standards (AR-C) to answer this question.)
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