Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Question
Chapter 17, Problem 9RQ
To determine
Identify the effect of the given situation on the audit report for the current year.
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" In our opinion, the financial statements give a true and fair view of the state of the Company's affairs and have been properly prepared in accordance with the Hong Kong Companies Ordinance. "Q:The auditor found that a client has switched the inventory valuation method from weighted average method used last year to First-in-first-out method this year, and the effect is material to this year's financial statements. (i) What should the auditor consider when deciding on the suitable opinion?(ii) Suggest the possible opinions and explain the situations that give rise to each opinion.
During the most recent year's audit of Pillco Corporation, the auditors have once again noted that inventory turnover is considerably
slower than the industry average. Which of the following should the auditors consider doing to address this issue?
O The auditors should consider issuing a qualified opinion on the client's inventory accounts in order to draw attention to this
issue.
O The auditors should consider making reference to this in the management representation letter, to ensure client
management is appropriately aware of this issue.
O The auditors should consider requesting the client formulate note disclosure in the financial statements, specifically
addressing this issue.
O None of these answer choices are correct.
In conducting year-end inventory counts, your audit team is debating the impact of the client's right of return policy both on inventory valuation and revenue recognition. The assistant controller argues that there is no need to worry about the return policies since they have not changed in a while. The audit senior wants a more authoritative answer, given the recently issued standard on revenue recognition. You have been asked to conduct some research of the authoritative literature before she presses the point with the client.
Instructions
If your school has a subscription to the FASB Codification, log in and prepare responses to the following. Provide Codification references for your responses.
a. What is the authoritative guidance for revenue recognition when right of return exists?
b. When is this guidance important for a company? That is, for which of steps in the five-step revenue recognition model does right of return come into play?
c. Does the FASB literature provide…
Chapter 17 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 17 - Prob. 1RQCh. 17 - What is the function of notes to financial...Ch. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQ
Ch. 17 - Prob. 11RQCh. 17 - Prob. 12RQCh. 17 - Prob. 13RQCh. 17 - Prob. 14RQCh. 17 - Prob. 15RQCh. 17 - Prob. 16RQCh. 17 - Prob. 17RQCh. 17 - Prob. 18RQCh. 17 - Prob. 19RQCh. 17 - Prob. 20RQCh. 17 - Prob. 21QRACh. 17 - Prob. 22QRACh. 17 - Prob. 23QRACh. 17 - Prob. 24QRACh. 17 - Prob. 25AOQCh. 17 - Prob. 25BOQCh. 17 - Prob. 25COQCh. 17 - Prob. 25DOQCh. 17 - Prob. 25EOQCh. 17 - Prob. 25FOQCh. 17 - Prob. 25GOQCh. 17 - Prob. 25HOQCh. 17 - Prob. 25IOQCh. 17 - Prob. 25JOQCh. 17 - Prob. 25KOQCh. 17 - Prob. 25LOQCh. 17 - Prob. 26OQCh. 17 - Prob. 27OQCh. 17 - Prob. 28OQCh. 17 - Prob. 29OQCh. 17 - Prob. 30OQCh. 17 - Prob. 31OQCh. 17 - Prob. 32OQCh. 17 - Prob. 33PCh. 17 - Prob. 34PCh. 17 - Sturdy Corporation (a nonpublic company) owns and...Ch. 17 - Prob. 36PCh. 17 - Prob. 37PCh. 17 - Prob. 38ITCCh. 17 - Prob. 39ITCCh. 17 - Prob. 40RDC
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