Auditing and Assurance Services (16th Edition)
Auditing and Assurance Services (16th Edition)
16th Edition
ISBN: 9780134065823
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Chapter 3, Problem 25DQP
To determine

Identify (a) condition, (b) materiality level and (c) type of report for the given situations.

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(b) You are the audit partner in Jason & Associates. Jason & Associates have accepted a recent engagement for a retail company called, Food Co-op. You have obtained the Annual Financial Statements of Food Co-op and studied the opening balances. As part of the audit plan you have decided to place reliance on the work of the prior auditors. Explain what are the main procedures you would have to perform to place reliance on the work of the prior auditors, i.e. in this case the opening balances?
Identify 3 different factors that may have an impact on the risk of performing the audit (i.e. inherent risk, control risk, etc) and how the factor identified impacts the risk of the audit (i.e. increases/decreases risk). One of your firm's longtime audit clients owns a group of companies and recently added a new addition to the group - Stained Glass Inc - which your firm will be auditing for the first time this year. The manager of Stained Glass Inc, Jennifer, is relied upon by the owner to run the day-to-day operations of the company with minimal oversight. Jennifer's annual bonus is based on a percentage of pre-tax net income per the audited F/S. Jennifer has hired her sister to perform all of the accounting for Stained Glass Inc as Jennifer does not know much about accounting. Additionally, you are told that the bank relies on the audited F/S of the group to make lending decisions.
1) You are running an audit firm at muscat and you are appointed as the auditor of Assarain Furnishing LLC, which is a leading supplyier of furnitures across the Gulf. You are provided with its financial statement for the year 2021 for conducting audit. Answer the following questions based on the same. a) Discuss the procedures to be followed by you at the time of examining the evidences? b) How can you ensure the reliability of audit evidences?
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