Question
Consider each of the following independent situations a) You are auditing a charity where net income is generally about 50% of gross revenues. Due to
Consider each of the following independent situations
a) You are auditing a charity where net income is generally about 50% of gross revenues. Due to the small size of the charitys staff, there is a lack of control over the completeness of inventory. Despite your best efforts you feel that you do not have enough evidence to conclude that revenue is complete.
b) Inventory on hand at year end has been valued by the client at cost in the financial statements. However, net realisable value is 10% below cost according to the audit findings.
c) Your client has several bank accounts, one of which is in a foreign country. Cash balances total $740,000 with the account maintained in the foreign country totaling $528,740. You have been unable to obtain a bank audit certificate or any third party confirmation with respect to the foreign bank account. The client has been unable to supply you with bank statements or other supporting documentation in relation to this bank account. Materiality for the client has been set at $480,000. All cash balances are classified as current assets in the clients financial statements.
For each of the situations above :Identify the appropriate audit opinion to be issued by the audit partner. Give reasons as to why the particular audit opinion should be issued and any action that the auditor should undertake prior to giving the audit opinion.
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