Connie is the recently appointed engagement partner of the audit of Camel Ltd. She has just taken over the audit from Kar-Ming Leo, who rotated off the audit after a seven-year period as the engagement partner. Kar-Ming had a small portfolio of clients and was able to complete most substantive testing for Camel at year end. Connie is unable to do this because she is facing difficulties with two of her other large clients. These clients have just been advised that their financing arrangements with U.S.-based banks may not be renewed, raising doubts about their ability to continue as going concerns. The U.S. banks will make their financing decisions very close to the clients' year ends, forcing Connie to spend considerable time in this period with these clients.
The financing problems of Connie's existing clients have created demands on her audit team that she must resolve. The audit firm cannot provide her with the additional staff she has requested for the year-end period because the clients of several other partners are also facing financing difficulties due to the credit crisis in the United States.
The audit firm's ethical rules do not allow Kar-Ming to remain as the auditor of Camel, and it is too late to find new partners for any of her other clients, so Connie must find a way to continue with the audit and still meet all professional and legal standards. So far, the audit team has conducted the preliminary risk assessment for Camel, and the results of early control testing confirm that Camel has excellent controls.
Connie calls a meeting with her senior audit team members to discuss the issue.
Required
Explain how Connie could vary the timing of the substantive testing at Camel to help her meet her audit obligations. Specifically:
(a) Give examples of substantive procedures that could be performed prior to year end
(b) Explain how Connie will use roll-forward procedures to complete the audit
(c) Explain any other considerations that would affect the timing of substantive procedures for Camel.