Audit reports are essential to the audit and assurance engagements because they communicate the auditor's findings. Users of financial statements rely on the auditor's report to provide assurance on the company's financial statements. The auditor is likely to be held responsible if an incorrect audit report is issued. The audit report is in fact the final output in the entire audit process. For the following independent situations, assume that you are the audit partner of the engagement: You were engaged to audit the Perwaja Company's financial statements after the close of the corporation's fiscal year. Because you were not engaged until after the balance sheet date, you were not able to physically observe the inventory, which is highly material On the completion of your audit, you are not satisfied that Perwaja's financial statements are presented fairly, especially the inventory about which you were not able to satisfy yourself by the use of alternative audit procedures Required For each of the above independent situation, identify the appropriate audit report that should be issued and necessary justifications for such report. Arrange your answer as follows Types of audit report Justifications 2 B III III c? You are auditing Ahsan Cuisines for the first time. The client has been in business for several years but has never had an audit before After the audit is completed, you conclude that the current year balance sheet is stated correctly in accordance with the GAAP. Further, the client authorize you to extend audit tests for any of the previous years, Required For each of the above independent situation, identify the appropriate audit report that should be issued and necessary justifications for such report Arrange your answer as follows: Types of audit report Justifications Super Fast Logistics Incorporated has a fleet of several delivery trucks, in the past the client had followed the policy of purchasing all equipment . In the current year, they decided to change the depreciation method to straight line instead of the current sum of digits. The method of accounting for the trucks depreciation is therefore changed to straight line. This change in policy is fully discosed in the notes to the financial statements Required For each of the above independent situation, identify the appropriate audit report that should be issued and necessary justifications for such report. Arrange your answer as follows: Types of treport You complete the audit of Ibrahim Retail Store, and in your opinion, the financial statements are fairly presented. On the last day of the audit you discover that one of your junior auditors has a material investment in Ibrahim Retail Store. Nonetheless, he was not involved in the audit of Ibrahim Retail Store Required For each of the above independent situation, identify the appropriate audit report that should be issued and necessary justifications for such report. Arrange your answer as follows: Types of audit report Justifications Four weeks after the year-end date, a major customer of Ruby Construction declared bankrupt Because the customer had confirmed the balance due to Ruby at the balance sheet date, management refuses to charge off the account or otherwise disclose the information. The receivable represents approximately 30% of the account receivable and 20% of net earnings before taxes Required For each of the above independent situation, identify the appropriate audit report that should be issued and necessary justifications for such report. Arrange your answer as follows: Types of audit report Justifications The following situations involves possible violations of the AICPA's Code of Professional Conduct, State whether it is a violation of a Code and provide your justification for the decision. Arrange your answer as follows: Status - Violation or no-violation Justifications Remaco-Solution, CPA, provides tax services, management advisory services, and bookkeeping services and conducts audits for the same public client. Because the firm is small, the same person often provides all the services. The following situations involves possible violations of the AICPA's Code of Professional Conduct State whether it is a violation of a Code and provide your justification for the decision. Arrange your answer as follows: Status - Violation or no-violation Justifications Mohamad Hafiz is the partner in charge of the audit of Northern Bank. Hafiz purhased a beach villa last year and obtained mortgage financing from Northern Bank, The following situations involves possible violations of the AICPA's Code of Professional Conduct State whether it is a violation of a Code and provide your justification for the decision. Arrange your answer as follows: Status - Violation or no-violation justifications Siti Rosmariza has been serving as the senior auditor on the audit of Lab-Tech Corporation. Because of her outstanding work, the head of internal audit at Lab-Tech Corporation extended her an offer of employment to join the internal audit department as internal audit manager. When the discussions with Lab-Tech Corporation began, Siti inform office's managing partner nevertheless she was not removed from the audit engagement The following situations involves possible violations of the AICPA's Code of Professional Conduct. State whether it is a violation of a Code and provide your justification for the decision. Arrange your answer as follows: Status - Violation or no-violation Justifications A non-audit client requests assistance of Kasim and Co., CPA, in the installation of local area network. Kasim had great experience in this type of work and knowledge of the client's computer system, but extremely occupied with other clients. So, he obtained assistance from a computer consultant. The consultant is not in the practice of public accounting, but Kasim is confident of his professional skills. Although the nature of the work is highly technical, Kasim is able to adequately review the consultant's work. The following situations involves possible violations of the AICPA's Code of Professional Conduct. State whether it is a violation of a Code and proude your justification for the decision. Arrange your answer as follows: Status - Violation or no-violation Justications Eight smal Aman CPA firtis have became involved in an information project by taking part in an inter-firm working paper terview program. Under the program, each firm designates two partners to review the audit files, including the tax returns and the financial statements of another CPA firm taking part in the program. At the end of each review, the auditors who prepared the working papers and the reviewers have a conference to discuss the strengths and weaknesses of the audit. The auditors obtained permission from most of their small-size clients but failed in obtaining authorization from four mients before the review takes place