Gregor Olson works at the National Bank branch in Copenhagen. According to the banks records, there is currently an outstanding loan of $380,000 to Danville Bus Services, a company that schedules charter bus trips between Copenhagen and other cities in Scandinavia. The company recently missed a loan payment, and Olson is becoming concerned about whether Danville will be able to repay the full amount of the loan. According to the documents held by the bank, the collateral on the loan consists of 20 large buses. Each bus has an average estimated value of $25,000. As part of his investigation of the company, Olson wants to make sure that these buses still exist. Olson decides that the best way to handle the situation would be to hire an auditor to count the buses. Olson therefore engages the services of Annaliese Haraldsson, CPA, who Olson knows has an extensive background in auditing automobile, bus, and trucking companies. Olson gives Haraldsson the buses registration information, which was provided to the bank when the original loan documents were signed. He then asks her to investigate the company and write a report that includes the following information:

1. Which of the 20 registered buses is parked in Danvilles parking lot on the night of August 31, 2008.

2. If Danville Bus Services actually owns or is responsible for maintaining the buses.

3. The physical condition of each bus, using the guidelines poor, good, and excellent.

The fair market value of each bus, using the current blue book for buses, which estimates the approximate wholesale prices of all used bus models, using the poor, good, and excellent conditions guidelines established in Part 3.

a. For each of the following parts of the definition of auditing, state which part of the preceding narrative fits the definition:

(1) Information

(2) Established criteria

(3) Accumulating and evaluating evidence

(4) Competent, independent person

(5) Reporting results

b. What difficulties might Haraldsson encounter when performing this audit?

Answer rating: 100% (QA)

a Parts of the definition of auditing in the narrative 1 Information The information in this case includes the details about the outstanding loan the ... View the full answer