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 5, Problem 19DQP
To determine

Explain whether the auditor’s behavior will be considered as “non-negligence, ordinary negligence, gross negligence, constructive fraud, fraud, or criminal behavior”, for each of the situations given

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Purnama Sdn Bhd involve in event management business and provide services to private and government agency. The company is required to have annual audit under the provision of the Companies Act, 1965. The owner of the company Mr. Hassan has some bookkeeping experience and has personally prepared the company’s financial statements. He does not understand why such statement should be examined by an external auditor. Explain five (5) ways in which an independent audit beneficial to Purnama Sdn Bhd.
Andrew Wilson, CPA, has assembled the financial statements of Texas Mirror Co. Texas Mirror is a small nonpublic company. Wilson has not performed an audit of the financial statements in accordance with generally accepted auditing standards. Wilson is confused about the standards applicable to this type of engagement. Please discuss the following: Identify and Explain where Wilson should look for guidance concerning this engagement. Discuss Wilson’s responsibilities with respect to a preparation of these financial statements.
Jennifer Nelson, CPA, has posted the general ledger and has maintained the financial records of Quinn Corporation. As a part of her responsibilities she has recorded journal entries and made closing entries without consulting Quinn's management. Which of the following best summarize the AICPA and SEC views as to the following question: Is audit independence impaired? Item AICPA SEC A. Yes Yes B. Yes No C. No Yes D. No No A) Option A B) OptioD C) Option C D) Option B
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