Possible fraud in a new audit engagement
Not what you're looking for?
Post, CPA, accepted an engagement to audit the financial statements of General Company, a new client. General is a publicly held retailing entity that recently replaced its operating management. In the course of applying auditing procedures, Post discovered that General's financial statements may be materially misstated due to the existence of fraud.
Required:
a. Describe Post's responsibilities regarding the circumstance described.
b. Describe Post's responsibilities to report (including what type of opinion) on General's financial statements and other communications if Post is precluded from applying necessary procedures in searching for fraud.
c. Describe Post's responsibilities to report (including what type of opinion) on General's financial statements and other communications if Post concludes that General's financial statements are materially affected by fraud.
d. Describe the circumstances in which Post may have a duty to disclose fraud to third parties outside General's management and its audit committee.
Purchase this Solution
Solution Summary
The solution outlines steps to be taken by the auditor after discovering possible fraud with a new client.
Solution Preview
a. CPA Post must communicate immediately with management about the suspected fraud. He would discuss the fact that it is likely they will not have a 'clean' (unqualified) opinion at the conclusion of their audit. He should propose a separate engagement to determine the actuality of fraud and the possible extent of that fraud. He should ask whether the client would ...
Purchase this Solution
Free BrainMass Quizzes
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Academic Reading and Writing: Critical Thinking
Importance of Critical Thinking
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.