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let us assume that you are a partner in charge to audit Moon Company. The audit report has not yet been prepared for 2018. Required:
let us assume that you are a partner in charge to audit Moon Company. The audit report has not yet been prepared for 2018. Required: In each independent situation following, indicate the appropriate action (a-g) to be taken. The possible actions are as follows: a. Issue a standard unqualified report. b. Qualify both the scope and opinion paragraphs. c. Qualify the opinion paragraph. d. Issue an unqualified opinion with an explanatory paragraph. e. Issue an unqualified opinion with modified wording (no explanatory paragraph). f. Issue an adverse opinion. g. Disclaim an opinion. The situations are as follows: 1. Two weeks after the St. of financial position date, one of Moon's buildings was destroyed by a flood. Moon refuses to disclose this information in a footnote to the financial statements, but you believe disclosure is required to conform to GAAP. The amount of the uninsured loss was material, but not highly material. 2. Moon Company changed its method of computing depreciation in 2007. You agree with the change and the change is properly disclosed in the financial statement footnotes. 3. You have substantial doubt about Moon's ability to continue as a going concern. 4. You relied upon another CPA firm to perform part of the audit. Although you were the principal auditor, the other firm audited a material portion of the financial statements. You wish to refer to (but not name) the other firm in your report. 5. One week before the end of fieldwork, you discover that the audit manager on the Becker engagement owns a material amount of Moon's common stock. 6. You were unable to confirm accounts receivable with Moon's customers. However, because of detailed sales and cash receipts records, you were able to perform reliable alternative audit procedures 7. Management of Moon Corporation refuses to allow you to observe, or make, any counts of inventory. The recorded book value of inventory is highly material. 8. Moon Corporation carries its property, plant, and equipment accounts at current market values. Current market values exceed historical cost by a highly material amount, and the effects are pervasive throughout the financial statements
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