global enterprise manufacturing
a. Identify which of the conditions requiring a modification of or a deviation from an b. State the level of materiality as immaterial, material, or highly material. If you cannot c. Given your answers in parts a. and b., state the appropriate audit report from the unqualified standard report is applicable. decide the level of materiality, state the additional information needed to make a decision. yooetive departionyrdingyrerr 1 McClellan's Used Cars, a client of yours, re?ently changed its depreciation method following alternatives (if you have not decided on one level of materiality in part b., appropriate report for each alternative materiality level): state the (1) Unqualified-standard wording (2) Unqualified-explanatory paragraph (3) Unqualified-modified wording (4) Qualified opinion only(7) Adverse* (5) Qualified opinion- (6) Disclaimer scope limitation GAAP departure 3,30 (bjectives 3-4,3-5,3-6,3-7,3-8) For the following independent situations, assume that you are the audit partner on the engagement from straight-line to sum-of-the-years' digits. The effect of the change on the cur- rent year's income is not material, but in future years, you suspect the effect will become material. The facts are adequately disclosed in footnotes. 2. Jordan Minerals recently decided to change its direction and spent the last 8 months developing business in the potash mining business. There are significant potential rewards, but the company's management recognizes that there are significant risks in the business that could jeopardize the success of its existing mining business. Since starting the new venture, the company has had no successes and some decline in profits. The facts are adequately disclosed in footnotes. 3. You recently noticed that Janssen Technology Solutions routinely excludes their statement of cash flows in the company's annual financial statements. Their reasoning, as explained to you, is that the statements are confusing to their readers, so they prefer to leave the information out. AICPA adapted. Copyright by American Institute of CPAs. All rights reserved. Used with permission. FESSION OF AUDITING a. Identify which of the conditions requiring a modification of or a deviation from an b. State the level of materiality as immaterial, material, or highly material. If you cannot c. Given your answers in parts a. and b., state the appropriate audit report from the unqualified standard report is applicable. decide the level of materiality, state the additional information needed to make a decision. yooetive departionyrdingyrerr 1 McClellan's Used Cars, a client of yours, re?ently changed its depreciation method following alternatives (if you have not decided on one level of materiality in part b., appropriate report for each alternative materiality level): state the (1) Unqualified-standard wording (2) Unqualified-explanatory paragraph (3) Unqualified-modified wording (4) Qualified opinion only(7) Adverse* (5) Qualified opinion- (6) Disclaimer scope limitation GAAP departure 3,30 (bjectives 3-4,3-5,3-6,3-7,3-8) For the following independent situations, assume that you are the audit partner on the engagement from straight-line to sum-of-the-years' digits. The effect of the change on the cur- rent year's income is not material, but in future years, you suspect the effect will become material. The facts are adequately disclosed in footnotes. 2. Jordan Minerals recently decided to change its direction and spent the last 8 months developing business in the potash mining business. There are significant potential rewards, but the company's management recognizes that there are significant risks in the business that could jeopardize the success of its existing mining business. Since starting the new venture, the company has had no successes and some decline in profits. The facts are adequately disclosed in footnotes. 3. You recently noticed that Janssen Technology Solutions routinely excludes their statement of cash flows in the company's annual financial statements. Their reasoning, as explained to you, is that the statements are confusing to their readers, so they prefer to leave the information out. AICPA adapted. Copyright by American Institute of CPAs. All rights reserved. Used with permission. FESSION OF AUDITING
