On April 2, 2015, QFOR’s previous auditor resigned after discovering that QFOR had issued fraudulent invoices and that unknown individuals affiliated with QFOR had returned false audit confirmations to them. SL was thereafter engaged to perform the 2014 Audit. In June 2015, after being informed that QFOR’s previous auditor would not reissue its 2013 audit report due to an inability to rely on management’s representations, SL was engaged to conduct the 2013 Audit.

1). Assess the relevance and reliability of evidence obtained from confirmations. Why would a “false confirmation” be returned to the auditor? Do you think “false confirmations” would be difficult for the auditor to detect?

2). What does the SEC mean when they say the “previous auditor would not reissue its 2013 audit report.” What does this refusal imply?

3). SLZKW was engaged to re-audit the 2013 financial statements due to the refusal of the previous auditors to reissue their audit opinion. What distinctive challenges are faced during a re-audit?

Answer rating: 100% (QA)

1Confirmations can be a very useful tool for auditors as they can provide supporting evidence for assertions made in the financial statements However ... View the full answer