Assignment Question(s):
IMPORTANT NOTE: Answer in your own words, DO NOT COPY from slides, fellow students, or internet sources without proper citation.
Q1. Rick is an independent auditor. The audit committee of the board of directors of Eastern Corporation asked Rick to audit Eastern’s financial statements for the year ended 31 December 2014. Rick explained the need to make an inquiry of the predecessor auditor and requested permission from the management to do so. Eastern’s management agreed and authorized the predecessor auditor to respond fully to Rick inquiries.
Required: (4 Marks).
Explain The information that Rick should obtain during its inquiry of the predecessor auditor before they accept the engagement?
What other audit procedures should Rick perform in evaluating Eastern as a potential client?
Q2. Read the following situations, and explain how the risk of material misstatement should be assessed and how detection risk could be affected by the assessment.
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