You a partner incharge of the audit for Bargin Ltd, a private company. The completion of the audit report is pending for the income year 2018 and you have recorded some situations where possible action is required They are listed below: Bargin Ltd, carries its property, plant, and equipment accounts at current market values. Current market values exceed historical cost by a highly material amount, and the effects are pervasive throughout the financial statements. Management of Bargin Ltd, refuses to allow you to observe, or make, any counts of inventory. The recorded book value of inventory is highly material. You were unable to confirm accounts receivable with Bargin Ltd, customers. However, because of detailed sales and cash receipts records, you were able to perform reliable alternative audit procedures. One week before the end of fieldwork, you discover that the audit manager on the Bargin Ltd, engagement owns a material amount of Bargin Ltd, common stock. You relied upon another audit firm to perform part of the audit. Although you were the principal auditor, the other firm audited a material portion of the financial statements. You wish to refer to (but not name) the other firm in your report. You have substantial doubt about Bargin Ltd,’s ability to continue as a going concern. Bargin Ltd, changed its method of computing depreciation in 2017. You concur with the change and the change is properly disclosed in the financial statement footnotes. Ten days after the balance sheet date, one of Bargin Ltd,’s buildings was destroyed by a fire. Camo refuses to disclose this information in a footnote to the financial statements, but you believe disclosure is required to conform with GAAP. The amount of the uninsured loss was material, but not highly material. The available actions are outlined below: a) Issue a standard unqualified report. b) Qualify both the scope and opinion paragraphs. c) Qualify the opinion paragraph. d) Issue an unqualified opinion with an explanatory paragraph. e) Issue an unqualified opinion with modified wording (no explanatory paragraph). f) Issue an adverse opinion. g) Disclaim an opinion. Required: 1) make a table, for each scenario listed (1-8), showing the correct course of action (a-g) to be done. 2) referring to the data in this problem, differentiate between a qualified opinion, adverse opinion, and a disclaimer of opinion, and explain the circumstances under which each is suitable.

You a partner incharge of the audit for Bargin Ltd, a private company. The completion of the audit report is pending for the income year 2018 and you have recorded some situations where possible action is required They are listed below: Bargin Ltd, carries its property, plant, and equipment accounts at current market values. Current market values exceed historical cost by a highly material amount, and the effects are pervasive throughout the financial statements. Management of Bargin Ltd, refuses to allow you to observe, or make, any counts of inventory. The recorded book value of inventory is highly material. You were unable to confirm accounts receivable with Bargin Ltd, customers. However, because of detailed sales and cash receipts records, you were able to perform reliable alternative audit procedures. One week before the end of fieldwork, you discover that the audit manager on the Bargin Ltd, engagement owns a material amount of Bargin Ltd, common stock. You relied upon another audit firm to perform part of the audit. Although you were the principal auditor, the other firm audited a material portion of the financial statements. You wish to refer to (but not name) the other firm in your report. You have substantial doubt about Bargin Ltd,’s ability to continue as a going concern. Bargin Ltd, changed its method of computing depreciation in 2017. You concur with the change and the change is properly disclosed in the financial statement footnotes. Ten days after the balance sheet date, one of Bargin Ltd,’s buildings was destroyed by a fire. Camo refuses to disclose this information in a footnote to the financial statements, but you believe disclosure is required to conform with GAAP. The amount of the uninsured loss was material, but not highly material. The available actions are outlined below: a) Issue a standard unqualified report. b) Qualify both the scope and opinion paragraphs. c) Qualify the opinion paragraph. d) Issue an unqualified opinion with an explanatory paragraph. e) Issue an unqualified opinion with modified wording (no explanatory paragraph). f) Issue an adverse opinion. g) Disclaim an opinion. Required: 1) make a table, for each scenario listed (1-8), showing the correct course of action (a-g) to be done. 2) referring to the data in this problem, differentiate between a qualified opinion, adverse opinion, and a disclaimer of opinion, and explain the circumstances under which each is suitable.

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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Question

You a partner incharge of the audit for Bargin Ltd, a private company.

The completion of the audit report is pending for the income year 2018 and you have recorded some situations where possible action is required

They are listed below:

Bargin Ltd, carries its property, plant, and equipment accounts at current

market values. Current market values exceed historical cost by a highly material

amount, and the effects are pervasive throughout the financial statements.

Management of Bargin Ltd, refuses to allow you to observe, or make,

any counts of inventory. The recorded book value of inventory is highly

material.

You were unable to confirm accounts receivable with Bargin Ltd, customers.

However, because of detailed sales and cash receipts records, you were able to

perform reliable alternative audit procedures.

One week before the end of fieldwork, you discover that the audit manager on

the Bargin Ltd, engagement owns a material amount of Bargin Ltd, common stock.

You relied upon another audit firm to perform part of the audit. Although you

were the principal auditor, the other firm audited a material portion of the

financial statements. You wish to refer to (but not name) the other firm in your

report.

You have substantial doubt about Bargin Ltd,’s ability to continue as a going

concern.

Bargin Ltd, changed its method of computing depreciation in 2017. You

concur with the change and the change is properly disclosed in the financial

statement footnotes.

Ten days after the balance sheet date, one of Bargin Ltd,’s buildings was destroyed

by a fire. Camo refuses to disclose this information in a footnote to the

financial statements, but you believe disclosure is required to conform with

GAAP. The amount of the uninsured loss was material, but not highly material.

The available actions are outlined below:

a) Issue a standard unqualified report.
b) Qualify both the scope and opinion paragraphs.
c) Qualify the opinion paragraph.
d) Issue an unqualified opinion with an explanatory paragraph.
e) Issue an unqualified opinion with modified wording (no explanatory paragraph).
f) Issue an adverse opinion.
g) Disclaim an opinion.

Required:

1) make a table, for each scenario listed (1-8), showing the correct course of

action (a-g) to be done.

2) referring to the data in this problem, differentiate between a qualified opinion, adverse opinion, and a disclaimer of opinion, and explain the circumstances under which each is suitable.

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