Henry Nowakowski, the auditor-in-charge of Vinacomin, a Vietnamese mining company, was reviewing the expert's report on the valuation of reserves for the world's largest bauxite deposits. The mining plans of Vinacomin have met with strong criticism from scientists, environmentalists, and the Vietnamese population. The bauxite operations had required the use of local auditors of another international public accounting firm. The group engagement partner, Judith Wooden, met with Henry to discuss the reliance their firm would be placing on the component auditors. She was concerned that the component auditors' conclusions were not based on adequate evidence. The financial statements being audited by the component auditors are a material part of the consolidated statements of Vinacomin. Required: a) What does Henry need to consider when assessing the expert's report on the bauxite deposits? b) Before the decision was made to use the work of another auditor, what should Henry and the firm consider have considered? c) Given that Judith is concerned with the component auditors' conclusions, what should Judith recommend? Why?

Henry Nowakowski, the auditor-in-charge of Vinacomin, a Vietnamese mining company, was reviewing the expert's report on the valuation of reserves for the world's largest bauxite deposits. The mining plans of Vinacomin have met with strong criticism from scientists, environmentalists, and the Vietnamese population. The bauxite operations had required the use of local auditors of another international public accounting firm. The group engagement partner, Judith Wooden, met with Henry to discuss the reliance their firm would be placing on the component auditors. She was concerned that the component auditors' conclusions were not based on adequate evidence. The financial statements being audited by the component auditors are a material part of the consolidated statements of Vinacomin. Required: a) What does Henry need to consider when assessing the expert's report on the bauxite deposits? b) Before the decision was made to use the work of another auditor, what should Henry and the firm consider have considered? c) Given that Judith is concerned with the component auditors' conclusions, what should Judith recommend? Why?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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