Question
Indicate the type of audit report(s) that would be appropriate in each of the following situations. a. A company has departed from GAAP. b. A
Indicate the type of audit report(s) that would be appropriate in each of the following situations. a. A company has departed from GAAP. b. A company's inventory records were deficient and the auditor was required to satisfy herself
that the inventory was properly stated using alternative procedures. She is satisfied that she
has sufficient appropriate evidence. c. In auditing a client, an auditor has determined that substantial doubt exists about an entity's
ability to continue as a going concern. d. A group auditor decides to take responsibility for the work of the component auditor who
audited a 70% owned subsidiary and issued an unmodified opinion. The total assets and
revenues of the subsidiary are 5% and 8%, respectively, of the total assets and revenues of the
entity being audited. e. A company changes from FIFO to LIFO for inventory valuation and the auditor concurs with the
change. The change has a material effect on the comparability of the entity's financial
statements this year, but is expected to have an immaterial effect in the future. f. Inadequate record retention policies by the client have resulted in a situation in which a CPA is
unable to obtain sufficient appropriate audit evidence with respect to a material account. g. A client has changed its estimate of likely doubtful accounts from 2% of credit sales to 3%. The
auditor believes the change to be reasonable.
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