The following questions concern information accompanying basic financial statements. Choose the best response. a. The Form 10-K filed by management of a public company includes a section on management’s discussion and analysis (MD&A) in addition to the annual financial statements. Which of the following best describes the auditor’s responsibility for the MD&A information? (1) The […]
International versus U.S. Accounting Standards For this assignment, you will research and compare international and U.S. accounting standards. This will enable you to see how the different reporting methods affect business and how product costs are affected by international business. The learning objectives of this report are as follows: Compare and contrast basic U.S. and […]
What is meant by the term level of assurance? How does the level of as- surance differ for an audit of historical financial statements, a review, a compilation, and a preparation engagement? 25-2 (OBJECTIVE 25-1) What is negative assurance? Why is it used in a review engagement report? 25-3 (OBJECTIVE 25-1) What should auditors do […]
1. Distinguish among engagements to prepare, compile, and review financial statements. What is the level of assurance for each? 2. What procedures should the auditor use to obtain the information necessary to give the level of assurance required of reviews of financial statements?
The following items were discovered during the December 31, 2019, audit of the financial statements of Westmoreland Corporation: 1. The company’s financial statements did not include an accrual for bonuses earned by senior management in 2019 but payable in March 2020. The aggregate bonus amount was $125,000. 2. Equipment originally costing $725,000 that was fully […]
In March 2018, Toys R Us confirmed that it would close all of its U.S. stores after its plans to survive Chapter 11 bankruptcy proceedings failed. Visit the SEC’s Edgar database to locate the company’s (1) Form 10-K filing for the fiscal year ended January 28, 2017 (filed on April 12, 2017) and (2) Form […]
Callie Peters is completing the audit of MakingNewFriends.com for the year ended December 31, 2019. Callie has been the audit manager on this engagement for the past three years. MakingNewFriends.com issued stock two years ago but has had difficulty establishing a loyal client base and generating advertising revenues. In reviewing results for the current year, […]
The following questions deal with contingent liabilities and the review for subsequent events. Choose the best response. a. When a contingency is resolved subsequent to the issuance of audited financial statements, which correctly contained disclosure of the contingency in the footnotes based on information available at the date of issuance, the auditor should (1) inform […]
1. Explain the purpose of a client letter of representation. What types of information are normally included in the letter? 2. How does an auditor evaluate the unadjusted misstatement schedule at the end of the audit engagement to assess whether the financial statements are fairly presented?
The amount of subjectivity involved in establishing fair value estimates can be complex for management responsible for making the fair value measurements and disclosures contained in financial statements. This is particularly true for fair value measurements for which observable market prices are not available. Auditing standards require auditors to obtain sufficient appropriate audit evidence to […]
