Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Ray, the owner of a small company, asked Holmes, a CPA, to conduct an audit of the company's records. Ray told Holmes that an audit

image text in transcribed

Ray, the owner of a small company, asked Holmes, a CPA, to conduct an audit of the company's records. Ray told Holmes that an audit was to be completed in time to submit audited financial statements to a bank as part of a loan application. Holmes immediately accepted the engagement and agreed to provide an auditor's report within 3 weeks. Ray agreed to pay Holmes a fixed fee plus a bonus if the loan was granted. Holmes hired two accounting students to conduct the audit and spent several hours telling them exactly what to do. Holmes told the students not to spend time reviewing internal controls but instead to concentrate on providing the mathematical accuracy of the ledger accounts and summarizing the data in the accounting records that supported Ray's financial statements. The students followed Holmes instructions and after two weeks gave Holmes the financial statements, which did not include footnotes. Holmes reviewed the statements and prepared an unmodified auditor's report. The report did not refer to generally accepted accounting principles or to the consistent application of such principles. Required : Briefly describe how the actions of Holmes resulted in a failure to comply with the principles underlying AICPA auditing standards. For EACH principle, explain at least TWO actions conducted by Holmes that would result in failure to comply with the principle. Brief Description of Principle Holmes' Actions Resulting in Failure to Comply with the Principle

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting

Authors: Richard Lewis, David Pendrill

5th Edition

0273622919, 978-0273622918

More Books

Students also viewed these Accounting questions

Question

Describe effectiveness of reading at night?

Answered: 1 week ago

Question

find all matrices A (a) A = 13 (b) A + A = 213

Answered: 1 week ago