Refer to the application case and analysis at the end of the chapter. Assume that, instead of withdrawing from the engagement, the auditors in this case had issued a clean audit report on all the companies in the case for the 20X9 year-end. They used the appraisals and other representations from the Blues brothers as evidence that the mining properties were correctly valued and the financial statements were fairly presented. One month after the audited financial statements were issued to shareholders, the auditors contact the companies’ accountant about their unpaid fees and learn that the companies have run out of cash and ceased operations. It is suspected that the Blues brothers took all the cash that the bank had lent to the companies and fled the country.

What are the auditors’ responsibilities in this situation?

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