Describe a situation in which a set of audit working papers might be used by third parties to support a charge of gross negligence against the auditors.
Answer to relevant QuestionsShould the working trial balance prepared by the auditors include revenue and expense accounts if the balances of these accounts for the audit year have been closed into retained earnings prior to the auditors’ arrival? ...Marion Watson & Co., CPAs, is planning its audit procedures for its tests of the valuation of inventories of East Coast Manufacturing Co. The auditors on the engagement have assessed inherent risk and control risk for ...“Working papers should contain facts and nothing but facts,” said student A. “Not at all,” replied student B. “The audit working papers may also include expressions of opinion. Facts are not always available to ...Included in the financial statements are a variety of accounting estimates (e.g., allowance for doubtful accounts, obsolete inventory warranty liability). Audit procedures should be designed to obtain evidence about the ...The best means of verification of cash, inventory, office equipment, and nearly all other assets is a physical count of the units; only a physical count gives the auditors complete assurance as to the accuracy of the amounts ...
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