Marco Ramirez is the partner on the audit engagement of Sun Products, a private company based in
Question:
Marco Ramirez is the partner on the audit engagement of Sun Products, a private company based in New Mexico.
Sun Products manufactures outdoor patio furniture and yard decorations. Sun Products recently acquired another company, Al Aire Libre, which is based in Argentina. Al Aire Libre represents 13% of Sun Products’ assets on the consolidated financial statements. Al Aire Libre has been audited by an Argentina-based accounting firm for the last five years. Marco and his team decide Al Aire Libre should continue to be audited by the Argentina-based accounting firm.
Required
a. Discuss the factors Marco should consider when deciding whether to refer to the Argentina-based accounting firm in the audit report on the consolidated financial statements of Sun Products.
b. If Marco decides not to assume responsibility for the work of the Argentina-based accounting firm, draft the audit report for Sun Products assuming an unmodified opinion is being rendered.
Audit ReportThe audit report is issued by a certified public accountant who is appointed by the shareholders to provide assurance upon the truth and fairness of the financial statements prepared by the managers of the company. Audit report contains the... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
a Marco should first consider if the subsidiary is a material portion of the consolidated financial statements Since the subsidiary represents 13 of total assets on the consolidated financial statemen...View the full answer
Auditing A Practical Approach with Data Analytics
ISBN: 978-1119401742
1st edition
Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton
