Taylor, CPA, is auditing the financial statements of Palmer Company, a continuing audit client. Taylor is about
Question:
Taylor, CPA, is auditing the financial statements of Palmer Company, a continuing audit client. Taylor is about to perform substantive audit procedures on Palmer's goodwill (excess of cost over the fair value of net assets purchased) that was acquired in prior years' business combinations. An industry slowdown has occurred recently, and purchased operations have not met profit expectations.
During the planning process, Taylor determined that there is a high risk that material misstatements in the assertions related to goodwill could occur. Taylor obtained an under standing of internal control and assessed control risk at the maximum level for the assertions related to goodwill.
Required:
a. Describe the substantive audit procedures Taylor should consider performing in auditing Palmer's goodwill. Do not discuss Palmer's internal control.
b. Describe the two significant assertions that Taylor would be most concerned with relative to Palmer's goodwill. Do not describe more than two.
Step by Step Answer:
Auditing An Assertions Approach
ISBN: 9780471134213
7th Edition
Authors: G. William Glezen, Donald H. Taylor