Astached are a number of independent scenarios that were enoruntered by CPAs during audit engagements REQUIRED: (1) For each scenario, indicate which of the fundamental principles of yerally accepted auditing standards (GAAS) applies to the site (2) For each fundamental principle identified in (1) above, indicate the related relevant element of the principle that applies to the situation with a brief explanation for your choice SITUATIONS THAT INVOLVE APPLYING GENERALLY ACCEPTED AUDITING STANDARDS OF THE AUDITING STANDARDS BOARD (AST) ACPA was met appointed as the antite for Jaguars Company until December 20. Because Jaguars Company's fiscal year eas December 31, the CPA did not have much time to plan und ob erve Jaguar's your end inventory (b) Panthers Company changed the depreciation method for its fixed assets resume the years-digits to straight line. The CPA feels that this change is appropriate because it mere closely reflects the expiration of benefits associated with the machinery. In addition, Panthers has adequately disclosed this change in the footnotes accompanying the financial statements Cincinnati and Bengal, CPA, recently acquired a large number of now audit chiesti Because these new clients required additional attention, many of the staff accountants were asked to ascunse additional responsibility on the audits of Cincinnati and Bengal's existing clients. In many cases, staff accountants were actually running the day to day activities on the audit opgement (d) In the audit of Brown, Inc.'s accounts receivable, Cleveland, CPA, was able to locale addresses for many of own customers in order to confirm their accounts receivable Management refused to provide the information to the waters, saying that these customers have done business with Browns for many years and should not be required to responds auditor's confirmation (c) The spouse of a stall accountant for Steelers CPA, has just been promoted to Vice President of Finance of an audit client of Steelers CPA Acompany has correctly implemented the FAS standards to account for its defined benefit pemic plans in their balance sheet and income statement. However, because of the complexity of this information, the company does not present the outdopplementary footnote disclosures called for by this standard Attached are a number of independent scenarios that were encountered by CPAs during audit engagements. REQUIRED: (1) (2) For each scenario, indicate which of the fundamental principles of generally accepted auditing standards (GAAS) applies to the situation. For each fundamental principle identified in (1) above, indicate the related relevant element of the principle that applies to the situation, with a brief explanation for your choice. SITUATIONS THAT INVOLVE APPLYING GENERALLY ACCEPTED AUDITING STANDARDS OF THE AUDITING STANDARDS BOARD (ASB) (a) A CPA was not appointed as the auditor for Jaguars Company until December 20. Because Jaguars Company's fiscal year end is December 31, the CPA did not have much time to plan and observe Jaguar's year end inventory. (b) Panthers Company changed the depreciation method for its fixed assets from sum-of-the- years'-digits to straight line. The CPA feels that this change is appropriate because it more closely reflects the expiration of benefits associated with the machinery. In addition, Panthers has adequately disclosed this change in the footnotes accompanying their financial statements. (c) Cincinnati and Bengal, CPAs, recently acquired a large number of new audit clients. Because these new clients required additional attention, many of the staff accountants were asked to assume additional responsibility on the audits of Cincinnati and Bengal's existing clients. In many cases, staff accountants were actually running the day to day activities on the audit engagements (a) In the audit of Browns, Inc.'s accounts receivable, Cleveland, CPA, was unable to locate addresses for many of Browns' customers in order to confirm their accounts receivable. Management refused to provide the information to the auditors, saying that these customers have done business with Browns for many years and should not be required to respond to an auditor's confirmation e) The spouse of a staff accountant for Steelers, CPAs, has just been promoted to Vice President of Finance of an audit client of Steelers, CPAs. (1) A company has correctly implemented the FASB standards to account for its defined benefit pension plans in their balance sheet and income statement. However, because of the complexity of this information, the company does not present the required supplementary footnote disclosures called for by this standard
