1. Describe the purpose of the predecessor-successor auditor communications? What information should be communicated between the predecessor and the successor? Who has the responsibility to contact whom? Did E&W property disclose information to Price Waterhouse?
2. Ernst & Whinney performed a "review" for ZZZZ Best. What steps or procedures are used when doing "reviewed" financials for a company? How does it differ from an audit? How are reviewed financials and audited financials different when considering level of assurance to the users of financial statements?
3. What is an engagement letter? What types of things are included in the engagement letter?
4. Many students would argue that signing the confidential agreement restricted E&W from getting proper evidence. Thus; their scope was restricted. Create a valid reason why E&W would sign this agreement? If clients-impose restrictions so the scope of the audit is really restricted what type of opinion would you issue in this situation and why?
5. What are analytical procedures? How would they have helped in this audit?
6. When auditing accounts receivables there are a few procedures to verify that the a/r is valid and collectable. One acceptable test is to look to see if the a/r was paid after year end. This is normally reliable evidence. Why was it not in this situation?