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Directions Based on the audit team's findings, the following will be used to formulate the audit opinion of 1) the financial statements, and 2) the
Directions Based on the audit team's findings, the following will be used to formulate the audit opinion of 1) the financial statements, and 2) the effectiveness of internal controls over financial reporting. Financial Test Results Result #1 Alice prepares a draft management representation letter for Jo, the partner, to review before presenting it to Keystone's CEO and CFO to sign. The letter includes a statement about management's responsibility for critical accounting policies and critical accounting estimates. Sally also drafts a report to be used for communication with Keystone's audit committee. The report includes critical items for Keystone. Revenue recognition is a critical accounting policy to discuss with the audit committee. Key items that impact revenue recognition include deferred revenue accounting and accounting for service contracts when Keystone supports technology it sells to other brokers. Some of the critical accounting estimates to discuss with the audit committee include compliance with standard ASC 606. The details to be discussed are: ASC 606 Revenue Recognition You've identified the contract with a customer with specified performance obligations, payment terms, and rights of the buyer and seller. Keystone charges customers for consulting services and workshops. The company accounts for all its contracts the same way
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