AFM351 Study Guide - Midterm Guide: Audit Evidence, Financial Statement, Accounts Receivable
28 Jun 2018
School
Department
Course
Professor
Audit fees fixed in advance.
You have a friend from HS as the friend
You sent junior staff with less experience in audit
They have issues with being behind on transactions
Gifts given to associates on the job
Bribe which auditors can't take•
Confidentiality
-
never assume something is known by the public in real life
•
Its okay but not so often on regular basis○
Familiarity problem (interacting with non-business situations frequently)•
There's always a chance that fee will increase, can't lock in guaranteed fee
○
You might end up doing less work, this is self-interest threat since you have a
constraint in place on how much you can do and how to follow GAAS
○
This fixed fee
•
You can't ever guarantee a clean opinion
-
Cristobal stressed the importance of an
unqualified opinion (too bad)
•
Junior staff not qualified for the audit
•
Identify violations to the rules of conduct
Yes. The bank will be successful. The bank is a foreseeable user, so the auditor could not
argue lack of privity. The financial statements were misstated, as both inventory and
accounts receivable were overstated. If the audit had been conducted in accordance with
GAAS, then it's likely that the errors would have been detected. The audit was not
conducted in accordance with GAAS due to lack of adequate supervision and lack of
sufficient appropriate audit evidence. The bank suffered a loss and is able to link the loss
to the reliance on the F/S and to the misstatements
AFM 351 Page 4
Document Summary
The bank is a foreseeable user, so the auditor could not argue lack of privity. The financial statements were misstated, as both inventory and accounts receivable were overstated. If the audit had been conducted in accordance with. Gaas, then it"s likely that the errors would have been detected. The audit was not conducted in accordance with gaas due to lack of adequate supervision and lack of sufficient appropriate audit evidence. The bank suffered a loss and is able to link the loss to the reliance on the f/s and to the misstatements. You have a friend from hs as the friend. You sent junior staff with less experience in audit. They have issues with being behind on transactions. Confidentiality - never assume something is known by the public in real life. Its okay but not so often on regular basis. There"s always a chance that fee will increase, can"t lock in guaranteed fee.
