Do you believe that the E&Y auditors should have used confirmations in auditing CBI’s year-end accounts payable? Defend your answer. Briefly explain the differing audit objectives related to accounts receivable and accounts payable confirmation procedures and the key differences in how these procedures are applied.
Answer to relevant QuestionsIn early 1994, E&Y officials discovered that the CBI auditors had failed to determine the true nature of the “advances” they had uncovered during the 1992 and 1993 audits. In your view, did E&Y have an obligation to ...Under what circumstances must audit procedures be applied to supplemental information accompanying a client’s financial statements? Describe the responsibilities auditors have when auditing such information.How should Powder River have recorded the sales of the working interests and the guaranteed payments made to the purchasers of those working interests in its accounting records?What is the nature and purpose of a “letter of representations”? Comment on the quality or strength of the audit evidence yielded by a letter of representations.Identify unique or uncommon audit risk factors posed by a charity. How should accounting firms modify their audits to address these risk factors?
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