James Burrow is the loan officer for the National Bank of Dallas.National has a loan of $325,000 outstanding to Regional Delivery Service, a companyspecializing in delivering products of all types on behalf of smaller companies. National’scollateral on the loan consists of 25 small delivery trucks with an average original cost of$24,000.Burrow is concerned about the collectibility of the outstanding loan and whether thetrucks still exist. He therefore engages Samantha Altman, CPA, to count the trucks, usingregistration information held by Burrow. She was engaged because she spends most ofher time auditing used automobile and truck dealerships and has extensive specializedknowledge about used trucks. Burrow requests that Altman issue a report stating thefollowing:1. Which of the 25 trucks is parked in Regional’s parking lot on the night of June 30,2013.2. Whether all of the trucks are owned by Regional Delivery Service.3. The condition of each truck, using the guidelines of poor, good, and excellent.4. The fair market value of each truck, using the current “blue book” for trucks, whichstates the approximate wholesale prices of all used truck models, and also using thepoor, good, and excellent condition guidelines.a. For each of the following parts of the definition of auditing, state which part of thepreceding narrative fits the definition:(1) Information(2) Established criteria(3) Accumulating and evaluating evidence(4) Competent, independent person(5) Reporting resultsb. Identify the greatest difficulties Altman is likely to have doing this audit.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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James Burrow is the loan officer for the National Bank of Dallas.
National has a loan of $325,000 outstanding to Regional Delivery Service, a company
specializing in delivering products of all types on behalf of smaller companies. National’s
collateral on the loan consists of 25 small delivery trucks with an average original cost of
$24,000.
Burrow is concerned about the collectibility of the outstanding loan and whether the
trucks still exist. He therefore engages Samantha Altman, CPA, to count the trucks, using
registration information held by Burrow. She was engaged because she spends most of
her time auditing used automobile and truck dealerships and has extensive specialized
knowledge about used trucks. Burrow requests that Altman issue a report stating the
following:
1. Which of the 25 trucks is parked in Regional’s parking lot on the night of June 30,
2013.
2. Whether all of the trucks are owned by Regional Delivery Service.
3. The condition of each truck, using the guidelines of poor, good, and excellent.
4. The fair market value of each truck, using the current “blue book” for trucks, which
states the approximate wholesale prices of all used truck models, and also using the
poor, good, and excellent condition guidelines.
a. For each of the following parts of the definition of auditing, state which part of the
preceding narrative fits the definition:
(1) Information
(2) Established criteria
(3) Accumulating and evaluating evidence
(4) Competent, independent person
(5) Reporting results
b. Identify the greatest difficulties Altman is likely to have doing this audit.

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