Question
Hayens End Dec 31, 2019 Dec 31, 2018 Cash 193405 194581 Restricted Cash 1948 2356 Account Receivable 34549 49860 Inventories, net 321905 332297 Prepaid Expenses
Hayens End
Dec 31, 2019 Dec 31, 2018
Cash 193405 194581
Restricted Cash 1948 2356
Account Receivable 34549 49860
Inventories, net 321905 332297
Prepaid Expenses 56574 26659
Total current asset 608381 606753
Property and Equipment 149894 136501
Goodwill 110000 110000
Intangible Asset 257000 257000
Other Assets 5636 13881
Total Asset 1130911 1123135
Assumption 1 The target acceptable audit risk for the Hayens' risk is %8
Assumption2 At the beginning of the audit estimated risk of material misstatement for Hayens is 22%
Assumption3 The tolerable misstatement for each account within the balance sheet has been set at
10 000 000 [or 10 000 in 1000's]
Question 1. Considering only 2018 balance sheet evidence, what would be reasonable auditor's expectation for 2019 prepaid expenses?
Question 2. Indicate the evidence you used and provide your reasoning why your answer to question 1 is reasonable auditor's expectations.
Question 3.Recognize that some of the variables in Audit Risk Model should be updated or revised each time the auditor discovers new audit relevant evidence such as the balance sheet above.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started