necessary adjustments. However, the directors refuse to amend the financial statements toSimon and Co has been engaged to perform an audit for High Trendy Sdn Bhd forthat the difference is due to an adjustment to inventory that had not been reflected in thedraft financial statements. After reviewing the inventory adjustment, you have made thethe year ended 31 December 20xx. While finalizing the audit, you noted that the net profitis MYR 350,000 in the directors' report compared with MYR 500,000 in the StatementCASE 15JonComprehensive Income. Based on your discussion with the management, you find oute the difference is due to an adjustment to inventory that had not been reflected in theocessary adjustments. However, the directors refuse to amend the financial statements toreflect the adjustment.Required:Discuss the type of audit opinion and draft an auditor's report to accompany the abovesituation.

A qualified opinion is expressed when the financial statements namely the income statement,…

Jon Simon and Co has been engaged to perform an audit for High Trendy Sdn Bhd for the year ended 31 December 20xx. While finalizing the audit, you noted that the net profit s MYR 350,000 in the directors' report compared with MYR 500,000 in the Statemnent of Comprehensive Income. Based on your discussion with the management, you find out that the difference is due to an adjustment to inventory that had not been reflected in the draft financial statements, After reviewing the inventory adjustment, you have made the necessary adjustments. However, the directors refuse to amend the financial statements to refiect the adjustment. Required: Discuss the type of audit opinion and draft an auditor's report to accompany the above iruation.

Jon Simon and Co has been engaged to perform an audit for High Trendy Sdn Bhd for the year ended 31 December 20xx. While finalizing the audit, you noted that the net profit s MYR 350,000 in the directors' report compared with MYR 500,000 in the Statemnent of Comprehensive Income. Based on your discussion with the management, you find out that the difference is due to an adjustment to inventory that had not been reflected in the draft financial statements, After reviewing the inventory adjustment, you have made the necessary adjustments. However, the directors refuse to amend the financial statements to refiect the adjustment. Required: Discuss the type of audit opinion and draft an auditor's report to accompany the above iruation.

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter14: Activities Required In Completing A Quality Audit

Section: Chapter Questions

Problem 90RSCQ

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As a result of analytical procedures an auditor determines that gross profit has declined from 30% to 15% in the current year. The auditor should.. A. Document manamgent intentions with respect to reversing the trend. B. Evaluate managment's performance in causing the deline C. Require a footnote disclosure D. Consider the possibility of an error in the financial statements.
Upon inspection of the records of Eisenhower Company in connection to its financial statement audit for the year ended December 31, 2022, the following errors were revealed: A fire insurance premium of P 40,000 was paid and charged to insurance expense in 2021. This covers one year from April 1, 2021. Inventory at December 31, 2020 was understated by P 80,000. Inventory at December 31, 2021 was understated by P 120,000. The year 2021 last quarter taxes amounting to P 60,000 were paid on January 19, 2022 and charged to expense account of 2022. A cash advance of P 100,000 in payment of goods to be delivered in January 2022 was received on December 15, 2021 and credited to Sales. The gross profit on sales is 40%. The net income for the year ended December 31, 2021 before any adjustments is P 1,550,000. Group of answer choices 1,600,000 1,200,000 1,440,000 1,550,000
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At the beginning of the year Candle Co. has an inventory balance of $32,000. The company has net income for the year of $56,000. Later, the accountant discovers an error that caused the beginning invenotory to be understated by $6,000. a. Assuming no other changes, what is the correct net income for the year? b. If the error was discovered after year-end, what was the effect of the error on the balance sheet? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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Rachel Warren, an auditor with Laplante CPAs, is performing a review of Skysong, Inc.’s inventory account. Skysong, did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was $748,000. However, the following information was not considered when determining that amount.Prepare a schedule to determine the correct inventory amount. (If an amount reduces the account balance then enter with a negative sign preceding the number , e.g. -15,000, or parenthesis e.g. (15,000). Enter 0 if there is no effect.) Ending inventory-as reported $enter a dollar amount 1. Included in the company’s count were goods with a cost of $337,000 that the company is holding on consignment. The goods belong to Harmon Corporation. enter a dollar amount 2. The physical count did not include goods purchased by Skysong, with a cost of $47,000 that were shipped FOB…
Farley Bains, an auditor with Nolls CPAs, is performing ar ga review of Ryder Company's Inventory account. Ryder did not have a good year, and top management is under pressure to boost reported income. According to its records, the inventory balance at year-end was $740,000. However, the following information was not considered when determining that amount. Prepare a schedule to determine the correct inventory amount. (If an amount reduces the account balance then enter with o negative sign preceding the number, e.g.-15,000, or parenthesis eg. (15,000). Enter 0 if there is no effect.) 1. Your answer is partially correct. 2 3 Ending inventory-as reported Included in the company's count were goods with a cost of $228,000 that the company is holding on consignment. The goods belong to Nader Corporation. The physical count did not include goods purchased by Ryder with a cost of $40,000 that were shipped FOB shipping point on December 28 and did not arrive at Ryder's warehouse until January…
Company B has outdated inventory costing $300,000 in the warehouse that is held for over 2 years. It is expected that the inventory would be sold to the customers at only 50% of the cost next year. The client has a net income of $2,000,000. Management claimed that the inventory has not been sold and therefore it should be continued to record at cost. Q）Discuss the most appropriate type of opinion the auditor should issue. Explain briefly the reason for the opinion.